Bitcoin Mining Difficulty Slides 11% as Market Slumps and U.S. Storm Disrupts Hashrate

The Bitcoin network’s mining difficulty fell to 125.86 T, the steepest single‑period adjustment since China’s 2021 mining ban. The drop coincides with a broader crypto‑price correction and a severe winter storm that temporarily knocked out a large share of U.S. hashing power.

What happened

• Difficulty correction: In the most recent difficulty retarget, which took effect at block 935,429, the network’s difficulty slipped by roughly 11.16 % to 125.86 trillion. This is the largest one‑period decline since the May‑July 2021 crackdown in China.
• Block time drift: The current average block interval has risen to just over 11 minutes, overshooting the protocol’s 10‑minute target. A lower difficulty is expected to bring the cadence back toward the intended rate.
• Future adjustment: Forecasts from mining‑analytics firm CoinWarz suggest a further 10.4 % reduction at the next scheduled retarget on 23 February, bringing difficulty down to about 112.7 T.

Market backdrop

The difficulty shift arrives amid a pronounced downturn in the cryptocurrency market. Bitcoin’s price has been halved from its all‑time high of roughly $125 k in late 2023 to a sub‑$60 k range in early 2024. The price erosion has pressured miners’ revenue streams, prompting many operators to scale back or relocate hashpower to more cost‑effective venues.

Weather‑induced hashrate shock

• Winter Storm Fern: A powerful ice storm swept across 34 U.S. states in January, freezing power grids and forcing a temporary curtailment of electricity use by miners.
• Foundry USA impact: The world’s largest mining pool by hashpower, Foundry USA, reported a near‑60 % loss of its hashing capacity, dropping from close to 400 exahashes per second (EH/s) to around 198 EH/s at the storm’s peak.
• Partial recovery: By the time of writing, Foundry USA has rebounded to roughly 354 EH/s, retaining a 29.5 % share of the global pool market, according to data from Hashrate Index.
• Overall network hashpower: Despite the pool’s recovery, total Bitcoin network hash rate has slipped to a four‑month low, reflecting both the storm’s disruption and a general pull‑back by miners reacting to weaker BTC prices and the lure of higher‑yielding AI‑focused data‑center contracts.

Analysis

1. Difficulty as an early‑warning indicator: The abrupt difficulty cut signals that miners are collectively responding to declining revenue. By lowering the barrier to block discovery, the protocol aims to keep block times stable, but it also hints at possible miner exits if price pressure persists.
2. Storm‑driven volatility is short‑term: Weather‑related hashrate contractions are typically temporary. Foundry’s rapid rebound suggests that U.S. mining infrastructure remains resilient, though repeated severe weather events could heighten operational risk.
3. Long‑term hashrate realignment: The ongoing shift of mining equipment toward AI and high‑performance computing workloads may permanently reduce Bitcoin’s total hashpower, especially if electricity costs in traditional mining hubs remain unattractive.
4. Historical context: The current adjustment mirrors the 2021 China crackdown, when difficulty fell between 12.6 % and 27.9 % over several retargets. However, unlike 2021, the present decline is driven more by market fundamentals and localized power issues than by a sweeping regulatory ban.

Key takeaways

• Difficulty fell 11 % to 125.86 T, the steepest drop since 2021. A further 10 % cut is projected for late February.
• Average block time is now >11 minutes, indicating that the network is currently slower than its design target.
• Winter Storm Fern caused a temporary 60 % hashrate loss for Foundry USA, the largest pool, though it has since recovered most of its power.
• Total network hash rate sits at a four‑month low, reflecting both weather impacts and a broader miner exodus amid Bitcoin’s price slide.
• Miner migration to AI data centers may permanently lower hashpower, challenging the assumption that Bitcoin’s security will always be backed by ever‑increasing computational effort.

As the Bitcoin ecosystem navigates a bearish price environment and external disruptions, the next difficulty adjustment on 23 February will be an important metric for gauging miner confidence and the network’s ability to maintain its 10‑minute block cadence.

Source: https://cointelegraph.com/news/bitcoin-difficulty-drops-11-worst-2021-china-ban?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound