A network-wide adjustment
Every 2,016 blocks, nodes recalculate the target from the time taken during the previous period. If blocks arrived too quickly, difficulty rises; if they arrived too slowly, it falls, within protocol limits. This helps regulate block timing as total network power changes.
- Retarget every 2,016 blocks
- Target average: about one block per 10 minutes
- Difficulty and BTC price are different measures
Why miners track it
Difficulty applies to the whole network, not one worker. More hashrate adds more computing power, but difficulty, fees, block rewards and Bitcoin’s market price also change. Any production estimate is therefore indicative and can vary over time.
Also see : Bitcoin, Mining, FAQ, Open help centre.
Protocol source: official Bitcoin Developer Guide: Bitcoin Developer Guide — Block Chain