Too Fast Blocks, Too Furious Adjustments: The Satoshi Drift Level-Out

Government-issued currencies are maintained by trusted authorities such as central banks, centralised payment systems, etc. In digital currencies where “code is law”, there are no centralised authorities and many of the functionalities are replicated by algorithms. For Proof of Work (PoW) blockchains, one of the most important algorithms is the difficulty adjustment algorithm (DAA). In an ever-changing hash rate environment, the duty of a DAA is to adjust mining difficulty to ensure block rate stability. This is of paramount importance because in the short term, it controls transaction throughput and in the long term, it controls the issuance of the native coin. Designing an effective DAA can be challenging because the real hash rate of a blockchain network is unobservable and can only be estimated based on previous interblock times. For Bitcoin (BTC) things are relatively simple. The network is vast and largely immune to hash rate fluctuations so mining difficulty can be adjusted infrequently (approx. every two weeks). The remaining PoW blockchains however, such as Bitcoin Cash (BCH), are more susceptible to hash power fluctuations and benefit from a more adaptive DAA which adjusts the mining difficulty after every block. Such DAAs already exist, have been battle-tested and have proven effective at maintaining average interblock times close to the target. Nevertheless, existing DAAs tend to focus on short-term stabilisation of block production and ignore long-term stabilisation thus allowing drift accumulation. In fact, both BTC and BCH halvings of April 2024 occurred almost 9 months ahead of schedule due to this drift. To our knowledge, no DAA had systematically addressed the problem of accumulated drift prior to our earlier work originally presented in BlockTEA 2025 [29]. This paper is an extension of our work which greatly generalises, and yet paradoxically simplifies, the DAA given therein.