diff --git a/src/engine.cairo b/src/engine.cairo
index 514a5f8c..556fc702 100644
--- a/src/engine.cairo
+++ b/src/engine.cairo
@@ -1,19 +1,181 @@
-// The engine is the main component that coordinates the verification of the Bitcoin consensus rules in Cairo.
-#[derive(Destruct)]
-pub struct Engine {}
+use core::result::Result;
+use core::option::OptionTrait;
+use core::traits::Into;
+use core::byte_array::ByteArray;
 
-pub trait EngineTrait {
-    fn new() -> Engine;
-    fn check_consensus_rules(ref self: Engine) -> Result<ByteArray, felt252>;
+// Constants
+const BLOCK_HEADER_SIZE: u32 = 80;
+const MAX_BITS: u32 = 0x1d00FFFF;
+const MAX_TARGET: u256 = 0x00000000FFFF0000000000000000000000000000000000000000000000000000;
+const EXPECTED_EPOCH_TIMESPAN: u32 = 60 * 60 * 24 * 14; // 2 weeks in seconds
+const BLOCKS_PER_EPOCH: u32 = 2016;
+
+#[derive(Drop, Clone)]
+struct BlockHeader {
+    version: u32,
+    prev_block_hash: ByteArray,
+    merkle_root_hash: ByteArray,
+    time: u32,
+    bits: u32,
+    nonce: u32
+}
+
+#[derive(Drop, Clone)]
+pub struct ChainState {
+    pub block_height: u32,
+    pub total_work: u256,
+    pub best_block_hash: ByteArray,
+    pub current_target: u32,
+    pub epoch_start_time: u32,
+    pub prev_timestamps: Array<u32>
 }
 
-pub impl EngineTraitImpl of EngineTrait {
-    fn new() -> Engine {
-        Engine {}
+#[derive(Drop)]
+struct BlockHeaderValidationContext {
+    block_header: BlockHeader,
+    block_hash: ByteArray,
+    target: u256,
+    prev_chain_state: ChainState,
+    block_height: u32
+}
+
+#[generate_trait]
+pub impl BlockHeaderImpl of BlockHeaderTrait {
+    fn new(
+        version: u32,
+        prev_block_hash: ByteArray,
+        merkle_root_hash: ByteArray,
+        time: u32,
+        bits: u32,
+        nonce: u32
+    ) -> BlockHeader {
+        BlockHeader { version, prev_block_hash, merkle_root_hash, time, bits, nonce }
     }
+}
 
+#[generate_trait]
+pub impl ChainStateImpl of ChainStateTrait {
+    fn new(
+        block_height: u32,
+        total_work: u256,
+        best_block_hash: ByteArray,
+        current_target: u32,
+        epoch_start_time: u32,
+        prev_timestamps: Array<u32>
+    ) -> ChainState {
+        ChainState {
+            block_height,
+            total_work,
+            best_block_hash,
+            current_target,
+            epoch_start_time,
+            prev_timestamps
+        }
+    }
+}
 
-    fn check_consensus_rules(ref self: Engine) -> Result<ByteArray, felt252> {
-        return Result::Ok("");
+#[generate_trait]
+pub impl BlockHeaderValidationContextImpl of BlockHeaderValidationContextTrait {
+    fn new(
+        block_header: BlockHeader,
+        block_hash: ByteArray,
+        target: u256,
+        prev_chain_state: ChainState,
+        block_height: u32
+    ) -> BlockHeaderValidationContext {
+        BlockHeaderValidationContext {
+            block_header, block_hash, target, prev_chain_state, block_height
+        }
     }
 }
+
+// The main engine for block header validation
+#[derive(Drop)]
+struct BlockHeaderEngine {
+    context: BlockHeaderValidationContext
+}
+
+#[generate_trait]
+pub impl BlockHeaderEngineImpl of BlockHeaderEngineTrait {
+    fn new(context: BlockHeaderValidationContext) -> BlockHeaderEngine {
+        BlockHeaderEngine { context }
+    }
+
+    fn validate_and_apply_block_header(ref self: BlockHeaderEngine) -> Result<ChainState, felt252> {
+        self.validate_prev_block_hash()?;
+        self.validate_proof_of_work()?;
+        self.validate_target()?;
+        self.validate_timestamp()?;
+
+        let next_state = self.apply_block_header();
+        Result::Ok(next_state)
+    }
+
+    fn validate_prev_block_hash(ref self: BlockHeaderEngine) -> Result<(), felt252> {
+        if self
+            .context
+            .block_header
+            .prev_block_hash != self
+            .context
+            .prev_chain_state
+            .best_block_hash {
+            return Result::Err('Invalid prev_block_hash');
+        }
+        Result::Ok(())
+    }
+
+    fn validate_proof_of_work(ref self: BlockHeaderEngine) -> Result<(), felt252> {
+        Result::Ok(())
+    }
+
+    fn validate_target(ref self: BlockHeaderEngine) -> Result<(), felt252> {
+        Result::Ok(())
+    }
+
+    fn validate_timestamp(ref self: BlockHeaderEngine) -> Result<(), felt252> {
+        Result::Ok(())
+    }
+
+    fn apply_block_header(ref self: BlockHeaderEngine) -> ChainState {
+        ChainState {
+            block_height: 0,
+            total_work: 0,
+            best_block_hash: "",
+            current_target: 0,
+            epoch_start_time: 0,
+            prev_timestamps: ArrayTrait::new()
+        }
+    }
+
+    fn next_prev_timestamps(ref self: BlockHeaderEngine) -> Array<u32> {
+        let mut timestamps = ArrayTrait::new();
+
+        timestamps
+    }
+
+    fn compute_total_work(ref self: BlockHeaderEngine) -> u256 {
+        let work_in_block = compute_work_from_target(self.context.target);
+        self.context.prev_chain_state.total_work + work_in_block
+    }
+
+    fn adjust_difficulty(ref self: BlockHeaderEngine) -> (u32, u32) {
+        (0, 0)
+    }
+}
+
+// Helper functions
+fn bits_to_target(bits: u32) -> u256 {
+    0
+}
+
+fn target_to_bits(target: u256) -> u32 {
+    0
+}
+
+fn compute_work_from_target(target: u256) -> u256 {
+    0
+}
+
+fn compute_timestamps_median(timestamps: Span<u32>) -> u32 {
+    0
+}
diff --git a/src/main.cairo b/src/main.cairo
index 732c0871..e4f222c6 100644
--- a/src/main.cairo
+++ b/src/main.cairo
@@ -1,10 +1,29 @@
-use raito::engine::EngineTrait;
-use raito::engine::EngineTraitImpl;
+use raito::engine::BlockHeaderEngineTrait;
+use raito::engine::BlockHeaderEngineImpl;
+use raito::engine::BlockHeaderValidationContextTrait;
+use raito::engine::BlockHeaderValidationContextImpl;
+use raito::engine::BlockHeaderTrait;
+use raito::engine::BlockHeaderImpl;
+use raito::engine::ChainStateTrait;
+use raito::engine::ChainStateImpl;
+use raito::engine::ChainState;
 
 fn main() {
     println!("Running Raito Bitcoin ZK client");
-    let mut engine = EngineTraitImpl::new();
-    let res = engine.check_consensus_rules();
+    let block_header = BlockHeaderImpl::new(0, "", "", 0, 0, 0);
+    let chain_state = ChainState {
+        block_height: 0,
+        total_work: 0,
+        best_block_hash: "",
+        current_target: 0,
+        epoch_start_time: 0,
+        prev_timestamps: ArrayTrait::new()
+    };
+
+    let mut context = BlockHeaderValidationContextImpl::new(block_header, "", 0, chain_state, 0);
+    let mut engine = BlockHeaderEngineImpl::new(context);
+
+    let res = engine.validate_and_apply_block_header();
     if res.is_ok() {
         println!("Execution successful");
     } else {