Bitcoins mining difficulty fell by around 11%, the biggest drop since China’s 2021 crackdown on the industry, following a sharp drop in hash rate triggered by falling prices and widespread winter storm-related outages in the US
Mining difficulty, which determines how difficult it is to find new Bitcoin blocks, is adjusted approximately every two weeks to maintain a 10-minute block interval on the network.
The latest change brought the metric down from over 141.6 trillion to around 125.86 trillion, according to Blockchain.com data, signaling a steep drop in the number of active machines securing the network.
The fall follows a series of strikes against miners. Bitcoin prices have fallen significantly from a record high of $126,000 in October to around $69,500.
This drop in prices forced many miners, especially those running outdated equipment and facing high energy costs, to shut down. Some also used their hardware to focus on artificial intelligence (AI), as megacap companies offer stable contracts and often financially compelling terms.
Bitfarms (BITF) notably saw its share price rise after saying it is no longer a bitcoin company and is instead focusing on data center development for high-performance computing and AI workloads.
Bitcoin mining revenue per terahash basis, measured via the hash price, has fallen from nearly $70 at the time the cryptocurrency was trading at an all-time high to now standing at just over $35.
Severe winter storms, especially in Texas, worsened the situation. Grid operators issued curtailment requests to save electricity for private users. Public miners reduced production, with some seeing daily bitcoin production drop by more than 60%.
Although a drop in severity may seem alarming, it acts as a self-correcting mechanism. For miners who stay online, the reduced competition can increase profitability and help sustain the business model.
Historically, large difficulty drops have also signaled market capitulation, often preceding a stabilization or rebound in price, as miners sell the BTC they mine to cover operating expenses.
