Bitcoin mining difficulty drops 11%! The largest decrease since China's "big crackdown" in 2021

Mempool data shows that Bitcoin mining difficulty was suddenly reduced by 11.16% on February 7, dropping to 125.86 T (Trillion). This is not only the largest decrease since China’s comprehensive ban on mining in 2021 but also ranks among the top 10 largest difficulty adjustments in Bitcoin history.
This difficulty adjustment occurred at block height 935,424, with the difficulty dropping sharply from the previous 141.67 T. Prior to this, due to a significant decline in total network hash rate, the average block time was extended to about 11.4 minutes, well above the Bitcoin protocol’s standard of 10 minutes, indicating that many miners were “pulling the plug” and withdrawing.
The main reason for the sudden drop in mining difficulty is a nearly 20% decrease in total network hash rate over the past month. According to Luxor’s hash rate index, just last week, hash rate fell by 11% to 863 EH/s, far below the October 2022 peak of 1.1 ZH/s.
The rapid retreat of hash rate is driven by two key factors. First, a sharp drop in Bitcoin’s price. Since reaching an all-time high of over $126,000 in October last year, Bitcoin has been declining, with a total drop of over 43%. On February 6, it briefly dipped near $60,000 before rebounding above $71,000.
Market selling pressure mainly stems from high US Treasury yields, continuous outflows from Bitcoin spot ETFs, and heightened risk aversion in stock and commodities markets. According to SoSoValue data, US Bitcoin spot ETF holdings turned net sellers by 2026, becoming a significant market dampener.
The second impact comes from non-market factors. In late January, the “Fiona Winter Storm” that hit the US caused power loads in multiple regions to tighten, forcing mining farms to reduce or shut down operations to prioritize residential electricity needs. Statistics show that this storm caused about 200 EH/s of hash rate to go offline, with major miner Foundry USA losing an astonishing 60%.
Mining profitability has also hit a bottom. The key indicator of miner revenue—“Hashprice,” which measures expected income per unit of hash rate—fell to a record low of $33.31 per PH/s per day on February 2; the average on February 1 was only $34.91.
Ben Harper, head of Luxor’s derivatives division, stated that the market generally considers $40 as the critical threshold for miners to continue operating. Now that the hash price has fallen below $40, most mining equipment is effectively burning money just to stay online.
Currently, only the latest Antminer S23 series remains relatively profitable; older models like the Whatsminer M6 series and Antminer S21 are either on the verge of losses or already unprofitable.
From an overall profit structure perspective, the outlook remains bleak. According to Checkonchain data, the average cost to mine one Bitcoin is about $87,000, while the spot price hovers around $70,000, meaning the market price is roughly 20% below the cost.
On the other hand, as on-chain activity in Bitcoin wanes in 2024, transaction fees now account for only about 1% of miners’ revenue, down from approximately 7%, making miners increasingly reliant on rising prices to sustain operations.
Despite the fundamental pressures, some analysts see a contrarian signal from historical data. In December last year, VanEck pointed out that during past periods of hash rate decline, Bitcoin had about a 65% chance of rising within the next 90 days.