How Does the “Difficulty Adjustment” Mechanism Protect the Blockchain from Rapid Hash Rate Fluctuations?

The difficulty adjustment mechanism (DAA) protects the blockchain by periodically recalibrating the mining difficulty based on the time it took to mine the previous set of blocks (e.g. 2016 blocks for Bitcoin).

If the hash rate increases, the DAA increases the difficulty to slow down block production. If the hash rate drops, it decreases the difficulty to speed it up.

This ensures a predictable block time and prevents the chain from stalling or becoming overly susceptible to a sudden hash rate drop.