On February 7, 2026, the Bitcoin network completed a routine difficulty adjustment, with mining difficulty plummeting from 141.84T to 125.86T, a decrease of 11.16%, marking the largest single drop since the mining ban in China in 2021. This adjustment was triggered by the total network hashrate falling from a high of 1100EH/s to 990EH/s, a monthly decline of about 20%. The core reason was the Bitcoin price crashing over 45% from a high of $126,000, once falling below $60,000, compounded by a winter storm in the U.S. leading to large-scale power restrictions for mining sites and a drastic drop in hashrate. This adjustment is not an isolated event, but rather a result of the resonance of multiple dimensions such as market conditions, mining industry, network security, coin prices, and capital flows, having profound and complex impacts on the crypto space, bringing short-term pain while also nurturing opportunities for industry reshuffling and long-term optimization.
For the mining community, this decrease in difficulty is a brutal survival reshuffle, but it is also a profit restoration window for quality miners. Previously, Bitcoin prices had continued to plummet, compounded by high mining difficulty, significantly squeezing miners' profit margins and plunging the industry into a comprehensive loss crisis. Data shows that the average cost of mining a Bitcoin at that time was about $87,000, while the spot price was only around $69,000, resulting in a cost inversion of over 20%. Older mining machines like the S21 and M6 series have approached or fallen into losses, with only the latest S23 series mining machines able to maintain thin profits. After the difficulty reduction of 11.16%, the revenue per unit of computing power directly increased by about 11%, allowing some inefficient mining machines to return to above the break-even line, temporarily alleviating the survival pressure of high electricity price mining farms. However, this does not mean that all miners can escape trouble; industry differentiation will further intensify: leading mining companies with low-cost electricity and efficient mining machines can accumulate more Bitcoin during this window period and reduce selling pressure; while small and medium-sized mining companies relying on high leverage and high electricity prices will still find it difficult to cover costs even with the difficulty reduction, ultimately having to choose to shut down and exit the market, accelerating the concentration of the industry towards the top. Meanwhile, the mining machine market is experiencing structural changes, with prices of inefficient mining machines continuing to decline while demand for efficient, low-energy mining machines is rising, leading to price increases of 5% to 10%, promoting upgrades in the mining machine industry towards more energy-efficient and higher computing power.
From the perspective of the Bitcoin network itself, difficulty adjustments are an embodiment of its self-regulating mechanism, which impacts network operating efficiency in the short term, while ensuring network stability and security in the long term. Bitcoin automatically adjusts its difficulty every 2016 blocks (about two weeks), with the core goal of maintaining an average block time of around 10 minutes. This sudden drop in computing power caused the block time to extend to 12 minutes at one point, slowing down transaction confirmation speeds, causing temporary congestion in the memory pool, and increasing users' waiting time for transfers. However, after the difficulty reduction, the block speed quickly returned to normal, alleviating network congestion issues. From a security perspective, the short-term decline in overall computing power has slightly weakened the network's ability to resist 51% attacks; however, this decrease in computing power is due to external factors (price, weather) causing short-term fluctuations rather than long-term miners exiting, and the distribution of Bitcoin's computing power has already globalized, making it difficult for fluctuations in a single region to threaten network security. With improvement in weather and price stabilization, computing power is expected to rebound quickly, and network security will swiftly recover. Moreover, this adjustment has also exposed the risks of concentrated computing power. The American mining pool Foundry USA once lost 60% of its computing power, which accounted for nearly 23% of global computing power, leading the industry to consider the decentralization of computing power and optimization of energy structure; future mining site layouts will focus more on regional diversification and the use of clean energy, enhancing the network's ability to resist risks.
Regarding the impact of mining difficulty on Bitcoin prices and market capital flows, the effects present a complex situation of short-term bearishness and medium- to long-term bullishness. In the short term, the significant decrease in difficulty signals 'miners' survival crisis and industry pessimism,' compounded by the previous price plunge, easily triggering market panic and exacerbating selling pressure. Miners, forced to sell more Bitcoin to pay electricity bills and repay debts, create a negative cycle of 'price drop → miners' losses → coin selling → further price drop,' which is one of the important reasons for Bitcoin's continued decline in early February. However, from a medium- to long-term perspective, the restoration of miners' profits brought about by the difficulty reduction will gradually lighten selling pressure, and even allow some profitable miners to start hoarding coins, reducing market selling. Historical data shows that in cases where mining difficulty decreases by more than 10%, the probability of Bitcoin price rising in the following 30 days reaches 65%. This adjustment is driven by external factors rather than miners' long-term pessimism; once prices stabilize and computing power recovers, market sentiment is expected to warm up. Meanwhile, the reshuffling of the mining industry eliminates high-cost and high-leverage participants, reducing factors of market instability, laying the groundwork for subsequent price rebounds. Additionally, the difficulty reduction also affects capital flows, with some funds shifting from high-risk mining to more stable areas like spot trading and ETFs. While short-term capital inflows into Bitcoin ETFs have weakened, their long-term allocation value remains, making them stabilizers in the market.
This decrease in difficulty has also driven changes in the cryptocurrency industry's supply chain and regulatory logic. On the mining side, some mining companies are beginning to transform, such as Bitfarms shifting from pure Bitcoin mining to data centers and AI computing businesses, seeking diversified profit paths and reducing dependency on coin prices. The mining pool industry is also experiencing consolidation, with small and medium-sized mining pools being acquired by larger pools due to loss of computing power and operational difficulties, further increasing the concentration of mining pools. For the entire cryptocurrency market, the pain in the mining industry transmits to upstream and downstream, with reduced orders from mining machine manufacturers, fluctuations in hardware prices, and slower construction of mining farms, but it also forces the industry to reduce costs and increase efficiency, driving technological innovation. In terms of regulation, the significant fluctuations in the mining industry have attracted regulatory attention, with some countries possibly strengthening regulations on mining energy consumption and financial risks, while also making regulators aware of Bitcoin's self-regulatory capabilities, prompting more rational regulatory policies to be introduced. Moreover, this event has made investors deeply aware of the risks of leverage and the brutality of the mining cycle, cooling market speculation and gradually returning to long-term value investment concepts.
Overall, the significant decrease in Bitcoin mining difficulty of 11.16% is a concentrated reflection of the short-term crisis in the cryptocurrency market and is also a necessary path for long-term optimization in the industry. It accelerates the reshuffling of the mining industry, eliminates outdated production capacity, and improves overall industry efficiency; it restores profits for quality miners and alleviates market selling pressure; it optimizes the distribution of computing power in the Bitcoin network and enhances long-term risk resistance; while also promoting a rational return to the market, creating conditions for subsequent stabilization and rebound. For investors, it is necessary to rationally view the impact of difficulty adjustments, focusing on computing power recovery and changes in miners' selling pressure in the short term, and concentrating on industry consolidation and network security in the medium to long term, seizing structural opportunities amidst volatility.
