Bitcoin Difficulty Set for ~8% Drop, Exceeding 2022 Capitulation

Bitcoin’s network hashrate has declined sharply in March, signaling mounting pressure on mining operators as profitability compresses to historical lows.

The seven-day moving average hashrate has fallen from more than 1 zettahash per second (ZH/s) in early March to around 930 exahash per second (EH/s), according to network data. The latest drop marks an acceleration of a broader downtrend that began after bitcoin retreated from its all-time highs in October, when network hashrate peaked above 1.1 ZH/s.

In the months that followed, the decline was relatively mild, with hashrate largely holding above the 1 ZH/s level. Even during a weather-related disruption in early February—when extreme cold in the United States pushed hashrate down to about 854 EH/s—the network quickly rebounded back above 1 ZH/s. By contrast, the more recent decline since early March appears more sustained, reflecting continuous miner capitulation rather than temporary operational outages.

The pullback comes as hashprice remains stuck below $30 per petahash per second (PH/s), or in the low-$30 range. At these levels, operators with higher electricity or financing costs face increasing difficulty maintaining profitability, prompting some to scale back or shut down machines.

Q4 earnings data analyzed by TheEnergyMag suggest that at current hashprice levels, even many of the largest publicly listed mining companies are struggling to generate positive cash flow from their core mining operations. Meanwhile, many operators have increasingly relied on debt and equity financing to sustain operations and fund their strategic pivots into high-performance computing (HPC) and artificial intelligence (AI) infrastructure, where longer-term contracts and higher-margin opportunities are seen as more stable sources of revenue.

The reduction in hashing power has slowed block production. Average block times in the current difficulty adjustment epoch have extended to approximately 10.9 minutes, above Bitcoin’s 10-minute target, as fewer machines compete to validate transactions.

As a result, Bitcoin’s mining difficulty is expected to decline by roughly 8% in the next adjustment, projected to occur in about two days. If realized, the drop would mark the largest downward difficulty adjustment since the summer of 2021, excluding temporary weather-related disruptions.

It would also exceed the 7.93% decline recorded in December 2022, which followed the market bottom of the last bear cycle. The comparison underscores the severity of the current margin compression, even as bitcoin’s price remains above prior-cycle lows.