Understanding Retargeting in Proof-of-Work Blockchains
Retargeting, also known as a difficulty adjustment algorithm, is a process used in proof-of-work (PoW) blockchains, such as Bitcoin, to regulate the difficulty of mining new blocks.
In PoW blockchains, miners compete to solve complex equations or puzzles to create new blocks.
However, the difficulty of these puzzles increases over time.
Miners adjust a nonce to generate a hash value lower than the predefined hash target for the block.
Mining, Consensus, and Retargeting
Miners strive to be the first to solve the puzzle and receive the associated reward.
Once most miners reach a consensus, the block is validated and added to the blockchain.
To determine the block’s hash value and validate transactions, miners repeatedly utilize the SHA-256 hashing function, modifying the nonce until the resulting hash value is below the target.
However, retargeting adjusts this target approximately every 14 days, or every 2016 block.
Adaptive Difficulty
Retargeting ensures that the average block generation time, typically 10 minutes, is maintained by increasing the puzzle’s difficulty.
This adjustment is achieved by dividing the hash target of the first block in the retargeting period by the hash target of the current block.
Constant retargeting in PoW blockchains means that more computational power is required by miners today compared to when Bitcoin was first created in 2009.
This mechanism helps maintain the security and stability of the blockchain network by dynamically adapting to changes in mining power and network conditions.