Bitcoin's $BTC$68,894.78 A sharp drop in hashrate caused by a sharp drop in prices in the US and widespread outages due to winter storms caused mining difficulty to drop by about 11%, the largest drop since China's crackdown on the industry in 2021.
The mining difficulty, which determines how difficult it is to find a new Bitcoin block, is adjusted approximately every two weeks to maintain a 10-minute block interval on the network.
According to data from Blockchain.com, the latest changes have reduced this metric from over 141.6 trillion to around 125.86 trillion, indicating a significant reduction in the number of active machines protecting the network.
This decline came after a series of blows to miners. The price of Bitcoin has fallen significantly from an all-time high of $126,000 in October to around $69,500.
This drop in prices forced many miners to close, especially those using outdated equipment and facing high energy costs. Some are repurposing hardware to focus on artificial intelligence (AI), as mega-cap companies offer stable contracts and often economically attractive terms.
BitFarms (BITF) is notable for its stock price soaring after the company announced that it is no longer a Bitcoin company and is instead focused on developing data centers for high-performance computing and AI workloads.
Bitcoin mining revenue per terrahash, measured by hash price, has fallen sharply from nearly $70 when Bitcoin was trading at an all-time high, and is now just over $35.
Severe winter storms, particularly in Texas, made the situation worse. Power grid operators have issued requests for reductions aimed at saving electricity for residential users. Public mining companies have scaled back production, with some companies seeing their daily Bitcoin production drop by more than 60%.
Although the reduction in difficulty may seem alarming, it acts as a self-correcting mechanism. For miners who stay online, less competition increases profitability and helps sustain their business models.
Historically, a significant drop in difficulty has signaled a market capitulation, often preceded by a stabilization or recovery in the prices miners sell for. $BTC They mine to cover operating costs.
