Disabling min-difficulty blocks on testnet4

The recent developments in the testnet environment, particularly concerning the mining and difficulty adjustments, are crucial in understanding the dynamics between CPU and ASIC miners. A significant change is being considered on testnet5 to address these issues, which involves disabling the min-difficulty rule that has been a pivotal part of the discussions. This proposed change can be viewed in detail on GitHub at this pull request.

The underlying problem starts when CPU miners initiate attacks by setting their block times 20 minutes into the future. This action triggers an increase in mining difficulty under the current protocol rules. In response, ASIC miners retaliate by mining blocks two hours into the future. This strategic move aims to reduce the difficulty, thereby allowing ASICs to mine new blocks faster than the standard 20-minute interval set after the initial CPU miner's attack.

However, this situation leads to a cycle where each group of miners has incentives to continue these preemptive strikes rather than restoring balance. The main motivation here is the increased coinbase rewards gained from replacing another miner's blocks. Under the testnet4 rules, this ongoing conflict does not encourage any party to cease their advantageous tactics, as doing so would simply allow their rivals to exploit the same vulnerabilities again.

Moreover, the consensus rules mandate a minimal difficulty for mining new blocks after each 20-minute cycle, exacerbating the issue. If miners were allowed to maintain stable timestamps without mandatory difficulty resets, the system might stabilize itself. Unfortunately, the required minimal difficulty prevents this potential equilibrium, making the launch of testnet5 a more straightforward solution than attempting to amend the protocols governing testnet4. This scenario underscores the complexities of mining strategies and the critical influence of protocol rules on blockchain network stability.