Bitcoin’s mining network is about to make a major adjustment. For the first time in nearly four years, the difficulty of mining Bitcoin is expected to decrease significantly.
Forecasts suggest the drop could be around 9% in the next five days. If this happens, it would be the biggest decline since July 2021, when China’s mining ban led to a 50% crash in the global hashrate.
Over the last two weeks, the amount of computer power used to secure the Bitcoin network has fallen by almost 30%, based on data from Mempool.space.
Glassnode also reports that the network’s hashrate is now just under 700 exahashes per second (EH/s). That’s a big fall from the recent peak of around 1,000 EH/s.
Bitcoin adjusts its mining difficulty every 2,016 blocks – roughly every two weeks – to ensure new blocks are added every 10 minutes. When fewer machines are mining, the network reduces the difficulty so blocks continue to be created on time. This time, the expected adjustment will be more severe than usual.
Mining Bitcoin today is no small task. In the early years, miners used regular computers with CPUs and graphics cards (GPUs). Now, nearly all miners use application-specific integrated circuits (ASICs).
These are powerful machines made just for mining Bitcoin. They use a lot of energy – often more than 7,000 watts – and need special electrical setups to run efficiently.
With hashrate falling and mining getting harder to profit from, many miners are struggling to stay afloat. According to a CryptoQuant contributor known as IT Tech, Bitcoin miners are currently “extremely underpaid”. Many are being forced to sell their Bitcoin to cover running costs.
The situation has worsened since early June. A key indicator called the sustainability metric has turned negative. This means that mining operations are no longer financially sustainable. More miners are choosing to sell their holdings rather than continue mining.
Miners had better earnings between March and May when Bitcoin was trading between $90,000 and $105,000. Since June began, those profits have nearly disappeared.
One metric – Miner Selling Power – tracks how much Bitcoin miners are able to sell. This figure has dropped to a new low.
For example, under current conditions, a miner with a machine running at 390 terahashes per second (TH/s) and using 7,215 watts of power, paying $0.05 per kilowatt-hour for electricity, would make just $11.76 a day in profit. It would take over 14 years – more than 5,100 days – to mine one Bitcoin.
Global events weigh on the mining network
Part of the reason for the drop in hashrate may be linked to global tensions. On 22 June, the United States carried out airstrikes on nuclear facilities in Iran. While not confirmed officially, it is believed that key power infrastructure may have been damaged.
Iran has been a major player in Bitcoin mining since 2019, when the country legalised the activity. The government used subsidised electricity from fossil fuels and nuclear plants to build a large mining industry.
At its height, Iran made up about 4.5% of the global Bitcoin hashrate. That number is now closer to 3.1%.
Following the airstrikes, reports of blackouts and internet outages began surfacing in both Iran and Israel. These power cuts likely affected mining operations. Some facilities may have shut down due to power loss, while others could have been damaged.
Between Sunday and Thursday last week, Bitcoin’s hashrate dropped by 8%. It fell from 943.6 million terahashes per second to 865.1 million, based on analyst estimates. This sharp drop added to the already weakening state of the network.
Despite the chaos, markets reacted positively to a ceasefire announcement from US President Donald Trump. He declared a “total ceasefire” between Iran and Israel, which helped calm investors. Bitcoin’s price jumped back above $106,000 on Monday.
The digital asset had dropped below $100,000 last week for the first time since early May. But it quickly recovered and closed at $105,577 on 23 June. At the time of writing, Bitcoin is holding above $105,000, showing a 3% gain in the last 24 hours.
Part of this recovery was driven by retail traders on Binance and a new wave of stablecoin liquidity.
According to CryptoQuant, Binance’s Retail Exchange Inflow – Spent Out Value Bands – spiked sharply on 15 and 19 June. The metric rose 25% and 19% on those dates, ahead of Bitcoin’s price drop to $98,286 on 22 June.
Retail investors usually follow market trends, but in this case, they may have acted before the correction.
This could mean many moved their funds off Binance, possibly into private wallets, as they braced for more volatility.
Institutional buying boosts Bitcoin’s momentum
While individual miners and retail traders are under pressure, large institutions and companies are continuing to buy Bitcoin. This has helped the market stay afloat, even as mining profitability declines.
One major development was the minting of $2 billion in Tether ($USDT) stablecoins on the Tron network. Of that, $1.24 billion flowed into HTX Global, the largest exchange netflow in recent months. This kind of liquidity usually goes into Bitcoin rather than altcoins – and this time was no different.
Bitcoin prices bounced quickly, gaining 4.54% over the next 24 hours. This suggests that investors were eager to buy the dip, both in spot markets and through derivatives.
Other indicators show strong buying interest. The Market Value to Realised Value (MVRV) Ratio has risen to 2.212, pointing to increased demand.
It’s still far from the danger zone around 3.7, where overvaluation becomes a risk. Meanwhile, the Spot Taker Cumulative Volume Delta (CVD) shows that buyers are in control.
Exchange-traded fund (ETF) traders are also adding to their Bitcoin holdings. In the last 24 hours alone, they bought $350 million worth of BTC. That brings the total net asset value of Bitcoin ETFs to $97.27 billion.
Several companies have also made big Bitcoin purchases recently. Strategy, formerly known as MicroStrategy, added 245 BTC between 16 and 22 June.
They spent $24.8 million at an average price of $105,856 per coin. Their total holdings now stand at 592,345 BTC, worth around $60 billion.
The Blockchain Group bought 75 more Bitcoins for €6.9 million, increasing its holdings to 1,728 BTC. The purchase was funded through a capital raise by its Luxembourg-based subsidiary.
Smarter Web Company added 196.90 BTC on 24 June at an average price of €77,122 per Bitcoin. It had already purchased 104.28 BTC on 19 June. The firm now holds over 543 BTC.
Its CEO, Andrew Webley, said the move is part of a 10-year plan and hopes other UK businesses will follow their example.
Vinanz Limited announced a new purchase of 37.72 BTC worth $3.85 million. The coins were bought through its institutional account with Fidelity Digital Assets. Vinanz now holds a total of 58.68 BTC at an average price of $97,491.
Cardone Capital made a major announcement this week, revealing its first Bitcoin purchase. The company bought 1,000 BTC on 23 June, valued at around $101 million.
Its CEO, Grant Cardone, said it’s the first real estate firm to fully integrate a Bitcoin strategy. The company plans to buy up to 3,000 more BTC this year.
All of this is happening against a tense backdrop. The Middle East crisis has driven many investors toward safer assets like gold. Even though Trump announced a ceasefire, fighting between Iran and Israel has continued.
Israel’s Defence Minister, Israel Katz, said: “I have instructed the IDF to respond forcefully to Iran’s violation of the ceasefire with powerful strikes against regime targets in the heart of Tehran”.
Bitcoin’s price has risen 3% in the past 24 hours but is still down 1.7% over the last week. The total crypto market value dropped 6% in the same period, sitting at $32 trillion.
Yet Bitcoin’s role in crypto portfolios is growing. A recent report from Bybit shows that BTC now makes up nearly 31% of all crypto holdings, up from 25% last November. This makes it the most held asset in crypto.
Meanwhile, interest in Ethereum has dropped. The Ethereum-to-Bitcoin ratio fell to a low of 0.15 in April but has since recovered slightly to 0.27. That means for every $1 in ETH, investors now hold about $4 in BTC.
According to reports, Bitcoin has outperformed all major global assets since President Trump’s inauguration. Corporate adoption has nearly doubled since early June. Over 244 companies now hold Bitcoin, up from 124 earlier this month.
In total, 3.45 million Bitcoins are held in corporate and ETF treasuries. That includes 834,000 BTC in public companies and 1.39 million BTC held through spot ETFs.
Joe Burnett of Unchained believes Bitcoin could hit $1.8 million by 2035, based on models comparing it to gold.
Retail traders, however, are stepping back. Their Bitcoin holdings have dropped by 37% since November, now making up just 11.6% of their crypto portfolios. Instead, they are shifting funds into XRP and other altcoins.
XRP holdings have doubled since late 2024, now making up 2.42% of crypto portfolios. This rise is likely due to expectations of a Ripple ETF approval. Solana holdings, on the other hand, have fallen from 2.72% to 1.76% since November.
