where is the adjustment calculation for the target value in the source code?

Question

Can someone point me to the source code and explain how the average is calculated for the adjustment of difficulty that takes place every 2016 ? Update: i have consulted with previous questions but it has not been documented properly and I am not expert so would be much appreciated.

Answer 1

The function is CalculateNextWorkRequired in pow.cpp L#49:

unsigned int CalculateNextWorkRequired(const CBlockIndex* pindexLast, int64_t nFirstBlockTime, const Consensus::Params& params)
{
    if (params.fPowNoRetargeting)
        return pindexLast->nBits;

    // Limit adjustment step
    int64_t nActualTimespan = pindexLast->GetBlockTime() - nFirstBlockTime;
    if (nActualTimespan < params.nPowTargetTimespan/4)
        nActualTimespan = params.nPowTargetTimespan/4;
    if (nActualTimespan > params.nPowTargetTimespan*4)
        nActualTimespan = params.nPowTargetTimespan*4;

    // Retarget
    const arith_uint256 bnPowLimit = UintToArith256(params.powLimit);
    arith_uint256 bnNew;
    bnNew.SetCompact(pindexLast->nBits);
    bnNew *= nActualTimespan;
    bnNew /= params.nPowTargetTimespan;

    if (bnNew > bnPowLimit)
        bnNew = bnPowLimit;

    return bnNew.GetCompact();
}

Explanation:
1. If retargeting is disabled, return the last difficulty.
2. Calculate the timespan between the last block and 2016 blocks ago
3. Truncate the timespan to no less than 1/4 of the target timespan (3.5 days) or no greater than 4x the target timespan (8 weeks).
4. Multiply the last difficulty target by the ratio actualTimespan:targetTimespan
5. Truncate to the maximum allowed target (bnPowLimit) if the resulting target is too high (very low difficulty)