Quote from: payb.tc on March 12, 2012, 10:41:37 AM

so, as an example calculation:

say difficulty is 1,000,000

last 2016 blocks took exactly 1 week.

does that mean next difficulty is 2,000,000 ...or is it an order of magnitude thing, like next diff 10,000,000?

(sorry, i don't really know how the total network hash rate might affect things like that)

It will be 2,000,000 .
Also, difficulty cannot change more than four-fold in a single retarget (that is, cannot become more than 4 times higher or lower at once).

The code that calculates the new difficulty is in main.cpp file, function GetNextWorkRequired. Code on Github