Bitcoin's network completed a routine difficulty adjustment at block height 935,424 on the evening of Feb 7, slashing mining difficulty from 141.84 T to 125.86 T, a drop of 11.16%. This is the largest single adjustment since China's blanket ban on crypto mining in May 2021.
The current network hashrate stands at approximately 948 EH/s, down about 14% from the all-time high of 1.1 ZH/s recorded in October last year. Analysts expect the next adjustment to bring further reductions, signaling a pronounced contraction in the mining sector.
Two Drivers: Price Collapse and Extreme Weather
The hashrate plunge is driven by two factors. Price collapse: Bitcoin has fallen over 45% from its October high of around $126,000, briefly dipping below $60,000 this week. Less efficient mining rigs and higher-cost operators are already operating at a loss. Extreme weather: Winter storms sweeping across the U.S. caused Foundry USA, one of the world's largest mining pools, to lose about 60% of its hashrate, dropping from nearly 400 EH/s to about 198 EH/s, severely impacting power supply and operations.
Mining Landscape Faces Potential Reshuffle
Historically, similar difficulty drops have preceded major mining shakeouts. After China's ban in 2021, difficulty fell more than 50% within weeks, but new mines in North America and Central Asia gradually filled the gap. The current pressure, however, stems from economic factors rather than policy. Unless prices recover significantly, capacity loss could be more persistent. Wintermute CEO Evgeny Gaevoy noted that the market structure is more orderly than last cycle—leverage is concentrated in transparent perpetual futures markets rather than opaque platforms like Genesis or Celsius, reducing the risk of systemic cascading liquidations for miners.
Miners Face Squeeze, Eye AI Pivot
In the near term, less efficient rigs will be forced offline, and overleveraged mining firms may face bankruptcy. Prolonged low prices could trigger the largest consolidation wave since 2022. However, as difficulty drops, surviving miners' profitability should gradually improve, potentially easing selling pressure. Many publicly listed miners are accelerating their pivot to AI, diversifying their business models and making the impact on Bitcoin sell pressure more complex.