The self-correcting mining difficulty
Bitcoin's protocol aims to produce one block every 10 minutes. Every 2,016 blocks (roughly two weeks), the network measures the actual time it took to mine them and adjusts the mining difficulty accordingly. If blocks were faster than 10 minutes on average, difficulty increases (puzzles become harder). If blocks were slower, difficulty decreases. This feedback loop ensures that block time remains stable regardless of how much mining power is added or removed from the network.
The adjustment is purely mathematical: it compares the actual elapsed time to the target (20,160 minutes for 2,016 blocks at 10 minutes each) and multiplies the difficulty by the ratio. If miners solve blocks in 18,000 minutes, the difficulty drops 10%. This is one of Bitcoin's most elegant features: the network is self-regulating without central authority.
Economic consequences of adjustment
Large hashrate swings can cause temporary block time volatility within each adjustment period. For example, if a major mining operation suddenly comes online, blocks accelerate for a few days until the next adjustment. This can cause transaction backlogs to clear (lower fees) or create them (higher fees) temporarily. The adjustment lag also creates incentive problems: miners know the next adjustment is coming, so during periods of high profitability, they sometimes add hash to maximize rewards before the adjustment raises difficulty.