Bitcoin is bracing for a historic bitcoin mining difficulty decrease as bitcoin miners are powering down operations at the fastest rate since China’s bitcoin mining ban in 2021. The drop comes as bitcoin plummets below $80,000, driving bitcoin’s hashprice to an all-time low.
Per bitcoin mining services firm Luxor’s Hashrate Index, Bitcoin’s hashrate has declined 11% over the last week to 863 EH/s; over the last month, it has fallen an even sharper 20%.
As a result, the Bitcoin network is tracking toward a negative difficulty adjustment of approximately 15% on February 7 at the time of publication. Bitcoin’s mining difficulty programmatically adjusts roughly every two weeks depending on the level of computing power on the network during this two week period (a negative adjustment makes bitcoin easier to mine, while a positive one makes it harder).
If the current estimate holds, it would be the steepest decline since the summer of 2021 during China’s bitcoin mining ban. The estimated adjustment reflects a massive capitulation event for operators as the network transitions from a growth phase into survival mode.
Luxor’s Director of Derivatives Ben Harper told Blockspace that hashprice – the key measure for bitcoin mining revenue – hit an all-time spot price low of $33.31 per petahash per day on February 2, while also printing an all-time daily average low of $34.91/PH/day on February 1 (both times UTC).
The hashpirce all-time low acts as a financial kill switch for older-generation and even some mid-tier mining hardware, as these rigs are now unprofitable or breakeven at average electricity rates.
Before the bottom dropped out for bitcoin, Winter Storm Fern put bitcoin’s hashrate on ice last week, as miners curtailed operations or shut down to avoid issues. The weather event forced industrial operators in the TVA and PJM power regions to curtail electricity usage to support residential grids.
The current hashrate drawdown is the most significant since the summer of 2021, when China outright banned bitcoin mining. Over the course of six weeks following the event, Bitcoin’s hashrate cratered 50%, leading to Bitcoin’s largest difficulty adjustment on record at -27.94%.
Header image via Luxor’s Hashrate Index.
Colin Harper contributed reporting.
