Bitcoin Records Largest Difficulty Drop Since China’s 2021 Mining Ban

The Bitcoin network implemented an 11.16% downward mining difficulty adjustment, reducing difficulty from 141.67 trillion to 125.86 trillion.

This marks the largest negative adjustment since July 2021, when China enforced a nationwide crypto mining ban, and ranks as the 10th largest difficulty drop in Bitcoin’s history.

Historically, only a handful of events have produced comparable declines, including the China ban, the June 2025 heatwave, and the December 2022 bear market. The February 2026 adjustment stands out as the most severe outside of regulatory shock events.

Environmental and Economic Forces Behind the Decline

The sharp reduction in mining difficulty followed a significant drop in network hashrate driven by a combination of weather-related disruptions and severe profitability pressure.

In late January 2026, Winter Storm Fern swept across parts of the United States, forcing large industrial miners to temporarily shut down operations. Facilities connected to ERCOT were particularly affected, as miners powered down rigs either to support grid stability or to avoid extreme spot electricity prices during the storm.

At the same time, mining economics deteriorated sharply. After a 45% decline from Bitcoin’s October 2025 peak, spot prices fell below the estimated average production cost of $87,000, pushing older-generation hardware into unprofitability and accelerating miner capitulation.

Hashprice Hits Record Low

Mining revenue conditions reached an extreme low in early February. Hashprice, which measures expected daily revenue per unit of computing power, dropped to an all-time spot low of $33.31 per petahash on February 2, 2026.

This collapse in revenue reduced incentives for marginal operators to remain online, compounding the hashrate decline ahead of the difficulty adjustment.

Difficulty as an Automatic Stabilizer

The difficulty reduction now acts as a built-in stabilizer for the network. With fewer active competitors, miners that remained online immediately benefit from improved odds of earning block rewards.

If Bitcoin’s price stabilizes, hashprice is expected to recover toward $35 per PH/s, offering partial margin relief to surviving operators. This mechanism has historically helped the network rebalance following periods of stress.

Network Security and Structural Shifts

While the sudden hashrate drop briefly increased the theoretical feasibility of a 51% attack, systemic risk remains limited. Mining capacity is globally distributed outside the United States, and many operators began restoring capacity shortly after the storm passed.

However, the events of early 2026 are reinforcing longer-term structural shifts. A growing number of industrial mining firms are pivoting infrastructure toward AI and High-Performance Computing (HPC) workloads, seeking more stable revenue streams amid increasingly volatile mining economics.

Key Takeaway

The February 2026 difficulty adjustment reflects a rare convergence of environmental disruption and economic stress, producing the largest network recalibration in nearly five years. While painful in the short term, the adjustment restores balance for remaining miners and underscores Bitcoin’s self-correcting design, while accelerating the industry’s diversification beyond pure proof-of-work mining.

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