Key Takeaways:
Bitcoin mining difficulty fell 18.5% from its November 2025 peak, marking the largest drawdown since China's 2021 mining ban, Galaxy Research data shows.
"Miners are entering a period of surrender," Galaxy Research said in a report, noting the retreat is the largest since the 2021 crackdown that saw difficulty plunge 45%.
The difficulty adjustment, which targets a 10-minute block time, has declined from approximately 155 terahashes in November 2025 to 127.17T after consecutive drops of 10.09% on June 14 and 5% on July 11. Bitcoin traded at $63,133 as of Friday, down 1.93% in 24 hours and 50.38% below its October 2025 all-time high of $126,198, according to CoinGecko data. The decline has pushed about 20% of miners below profitability, with J.P. Morgan estimating current production costs at roughly $78,000 per coin and CoinShares reporting average cash production costs of $79,995 for publicly traded miners in the fourth quarter of 2025.
The hashprice, a measure of daily revenue per unit of hashing power, fell to a post-halving low of $28 to $30 per petahash per second in March and remains near historic lows at roughly $32, Hashrate Index data shows. With Bitcoin trading below average production costs for five consecutive months, the network faces sustained pressure on active computing power.
Listed mining companies sold approximately 32,000 BTC in the first quarter of 2026, exceeding the total sold throughout all of 2025, according to industry reports. Riot Platforms produced 1,473 BTC in the quarter but sold 3,778 BTC — more than double its production — reducing its holdings to 15,680 BTC, an 18% year-over-year decline. The selling reflects a structural shift: miners are now liquidating coins to fund site upgrades and AI infrastructure buildouts, not just to cover electricity and debt payments.
Despite Bitcoin's 46% decline over the past year, mining stocks have rallied sharply. Hut 8 rose 363%, TeraWulf gained 269%, IREN added 121%, Riot climbed 60% and CleanSpark advanced 12% over the same period, RootData market data shows. The divergence reflects a revaluation of mining companies as AI infrastructure plays. CleanSpark on July 14 signed a 20-year lease generating approximately $6.6 billion in contract revenue for a 175-megawatt critical IT load. MARA spent up to $600 million to acquire a Texas site with planned capacity of up to 2 gigawatts. TeraWulf plans to raise $3.5 billion to expand its data center campus in Kentucky.
CoinShares expects that by the end of 2026, up to 70% of listed mining companies' revenue will come from AI and high-performance computing, up from about 30% at the start of the year. TeraWulf has already reached that threshold, with HPC leasing revenue of $21 million in the first quarter surpassing its mining revenue of less than $13 million.
The pivot carries risks. Mining stocks are now correlated with the Philadelphia Semiconductor Index rather than Bitcoin, exposing them to AI sector volatility. The Philadelphia Semiconductor Index dropped 10.8% over ten trading days in July, erasing approximately $1.3 trillion in market value, Reuters estimates show. Long-term AI contracts of 15 to 20 years also lock in power and capital that might otherwise return to the Bitcoin network when prices recover.
This article is for informational purposes only and does not constitute investment advice.
