Mining Difficulty Explodes: What the 15 Percent Jump Means

Mining Difficulty Explodes After U.S. Winter Storm: Bitcoin Network Shows Both Strength and Weakness

The Bitcoin network has just completed a remarkable adjustment that is likely to have far-reaching consequences for the entire mining industry. With an increase of around 15 percent to 144.4 trillion, mining difficulty has recorded its most massive jump since the Chinese mining ban in 2021. This development reveals not only the impressive resilience of the network, but also the increasing fragmentation of an industry under enormous economic pressure.

The drastic upward correction follows turbulent weeks in which winter storms disrupted the U.S. mining landscape—and raises fundamental questions about the future of decentralized computing power.

The Facts

Bitcoin mining difficulty increased by approximately 15 percent to 144.4 trillion on February 20, according to data from CoinWarz and Glassnode ^[1][2]. This increase marks the strongest upward adjustment since China's mining ban in 2021 and reverses an eleven to twelve percent drop from early February, which at the time represented the sharpest decline since said ban ^[1][2].

The previous difficulty drop was a direct consequence of extreme winter storms that hit large parts of the United States from early to late January, massively affecting power grids ^[1]. Foundry USA, the largest mining pool by hashrate, experienced a dramatic collapse in its computing power from nearly 400 exahashes per second to as low as 198 EH/s during the storm events, before recovery set in ^[1].

The hashrate—the total computing power securing the network—had reached a peak of 1.1 zettahashes per second in October, coinciding with Bitcoin's then-price high of $126,500 ^[2]. After Bitcoin's price crash to $60,000 in February, hashrate fell to 826 exahashes per second, but is currently stabilizing at around 1.0 zettahashes per second with Bitcoin trading at approximately $67,000 ^[2].

Interestingly, the winter storms did not necessarily lead to revenue losses for all affected miners. Many U.S. mining operators participate in so-called demand response programs or have flexible power contracts that allow them to pause mining operations and sell electricity back to the grid at peak prices ^[1]. Bruce Rodgers, Chairman and CEO of LM Funding America, explained: "In January, our power infrastructure highlighted the flexibility of our business model" ^[1]. The company generated more than a quarter of its typical quarterly energy and curtailment revenue in a single weekend during Winter Storm Fern through curtailment measures ^[1]. Singapore-based hardware manufacturer Canaan Inc. also confirmed that its U.S. mining activities in storm-affected regions participated in power reduction programs ^[1].

In parallel, economic pressure on the mining industry is intensifying dramatically. The hashprice—revenue per petahash per second—has crashed to a multi-year low of $23.90, significantly straining profit margins ^[2]. Despite these challenges, well-capitalized actors with access to cheap energy are keeping the network stable. State operators in the United Arab Emirates, for example, are sitting on unrealized book profits of around $344 million ^[2].

A remarkable shift is evident in the strategic reorientation of publicly traded mining companies. Increasingly, these companies are retrofitting their data centers for artificial intelligence applications ^[2]. Firms like Bitfarms have removed the term "Bitcoin" from their name, while investors at Riot Platforms are vehemently demanding the expansion of AI infrastructure ^[2].

Analysis & Context

The 15 percent difficulty increase is far more than a technical metric—it is a seismograph for the state of the entire Bitcoin mining industry. The automatic adjustment every 2,016 blocks (approximately every two weeks) ensures that blocks are found on average every ten minutes, regardless of available computing power. The current upward correction signals that despite massive disruptions from winter storms, sufficient miners have come back online or new capacity has been added.

Historically, such drastic difficulty fluctuations are rare. The last comparable collapse occurred during China's mining ban in 2021, when an estimated 50 percent of global hashrate went offline within weeks. At that time, it took several months for the network to stabilize and for hashrate to recover through expansion in North America, Kazakhstan, and other regions. The current situation is fundamentally different: the collapse was weather-related and temporary, with correspondingly rapid recovery.

The economic implications, however, are concerning. With hashprice at multi-year lows and simultaneously rising difficulty, inefficient miners are coming under existential pressure. This explains the strategic migration toward AI infrastructure: data centers built for Bitcoin mining can be retrofitted for GPU-intensive AI training at considerable profit. While this could create short-term selling pressure on Bitcoin if miners liquidate their holdings, it holds potential for a healthier market structure in the long term. The remaining miners are those with the lowest energy costs and most efficient hardware—a natural selection that ultimately makes the network more robust.

The flexibility of U.S. miners to sell electricity back during price spikes also demonstrates a symbiotic relationship between Bitcoin mining and energy grids. Bitcoin miners are increasingly functioning as flexible loads that stabilize grids and make renewable energy economically viable. These narratives could become regulatory significant, as they position mining as a net benefit to energy infrastructure.

Conclusion

• The 15 percent difficulty increase demonstrates the impressive resilience of the Bitcoin network after extreme weather events, but simultaneously increases economic pressure on miners with high operating costs considerably

• The migration of inefficient mining operations toward AI infrastructure marks a fundamental consolidation of the industry, which should lead to more stable market structures and reduced selling pressure in the medium term

• U.S. mining operators have strengthened their strategic position through demand response programs and are increasingly positioning themselves as stabilizing factors for power grids—an argument that could gain regulatory significance

• Only well-capitalized actors with access to cheap energy will remain profitable long-term at a hashprice of $23.90, which will further intensify geographic concentration in energy-rich regions

• The rapid recovery of hashrate after the storm-related collapse shows that the Bitcoin network remains functional even during regional disruptions in its largest mining hub—an important stress test for decentralization after the China migration