Bitcoin mining difficulties fell about 11%, its biggest drop since China’s crackdown on the industry in 2021, after a sharp drop in hashrate triggered by falling prices and widespread outages linked to winter storms in the United States.
Mining difficulty, which determines the difficulty of finding new Bitcoin blocks, adjusts approximately every two weeks to maintain a 10-minute block interval on the network.
The latest change brought that figure down from over 141.6 trillion to around 125.86 trillion, according to data from Blockchain.com, signaling a sharp drop in the number of active machines securing the network.
This decline follows a series of blows to miners. Bitcoin prices have fallen significantly from an all-time high of $126,000 in October to around $69,500.
This drop in prices has forced many miners, especially those using outdated equipment and facing high energy costs, to close their doors. Some have also repurposed their hardware to focus on artificial intelligence (AI), as large-cap companies offer stable contracts and often economically irresistible terms.
Bitfarms (BITF) notably saw its stock price rise after declaring that it was no longer a Bitcoin company and was instead focusing on developing data centers for high-performance computing and AI workloads.
Bitcoin mining revenue per terahash, measured via hashprice, plunged from nearly $70 when the cryptocurrency was trading at an all-time high, to now stand at just over $35.
Severe winter storms, particularly in Texas, have worsened the situation. Grid operators have issued reduction requests to conserve electricity for residential users. Public mining companies have reduced production, with some seeing their daily bitcoin production drop by more than 60%.
Although a drop in difficulty may seem alarming, it functions as a self-correcting mechanism. For miners who remain online, reducing competition can increase profitability and help maintain the business model.
Historically, major difficulty drops have also signaled market capitulation, often preceding a price stabilization or rebound as miners sell the BTC they mine to cover operational expenses.
