Bitcoin’s mining difficulty has fallen below its year-earlier level for only the second time in the network’s history, reflecting weaker mining economics and slowing growth in computing power as more operators shift resources toward artificial intelligence infrastructure.
The network’s difficulty now stands at 126.23 trillion after slipping 0.74 per cent. That level sits about 1.1 per cent below the 127.62 trillion recorded a year ago. It also marks a 19.1 per cent decline from the all-time high of 155.97 trillion reached in November 2025.
Bitcoin automatically adjusts mining difficulty every 2,016 blocks, or about every two weeks. The system keeps the average time needed to produce a block near 10 minutes. Consequently, lower difficulty means fewer computers competed to secure the network during the previous adjustment period.
The metric has also dropped about 14 per cent from its January peak. It followed declines of 10 per cent in June and another 5 per cent earlier in July.
The only previous year-over-year decline came after China banned Bitcoin mining in 2021. That policy temporarily removed roughly half of the network’s computing power before miners relocated elsewhere.
However, this decline stems largely from weaker business conditions instead of government intervention. Hashrate Index said lower Bitcoin prices, reduced mining revenue and growing investment in artificial intelligence and high-performance computing have redirected capital, electricity and mining operators away from the network. Texas power curtailments and disruptions in other mining regions also contributed.
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Bitcoin mining has always been cyclical
Meanwhile, lower difficulty has offered only limited financial relief. Hashprice, which estimates expected mining revenue per unit of computing power, fell to USD$27.66 per petahash per day in late June before recovering to USD$31.70.
Furthermore, Luxor’s forward market projects an average hashprice of USD$31.85 per petahash per day through December, suggesting miners expect only modest revenue improvement for the rest of 2026.
Bitcoin mining has always been a cyclical business because the network automatically adjusts to keep block production steady. When Bitcoin prices rise, mining becomes more profitable. Existing miners expand their operations and new companies add machines, increasing the network’s total computing power, known as hashrate.
As more miners compete for the same fixed number of Bitcoin rewards, the protocol raises mining difficulty every 2,016 blocks to maintain an average block time of about 10 minutes.
That higher difficulty gradually squeezes profit margins.
Miners with older equipment, higher electricity costs or heavier debt eventually become unprofitable and shut down. When enough operators leave the network, total hashrate falls.
Bitcoin then lowers the mining difficulty during its next adjustment, making it easier for the remaining miners to find blocks. Their share of the fixed block rewards increases, improving profitability without requiring a higher Bitcoin price.
Those better economics eventually attract new investment. Companies restart idle machines, expand existing facilities or build new mining sites. The resulting increase in hashrate pushes difficulty higher once again, repeating the cycle.
The current downturn follows the same broad pattern, but with an important difference. Instead of waiting for mining conditions to improve, some operators are redirecting capital, electricity and data centre capacity toward artificial intelligence and high-performance computing, where returns can currently exceed Bitcoin mining.
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