Published: February 12th, 2025
New data from CoinWars suggests Bitcoin’s mining difficulty metric has reached an all-time high of 114.6 trillion, this after a 5.5 per cent upward adjustment made over the past weekend (February 8th/9th).
The rise coincides with moves in the Hash Ribbon, a market indicator used by crypto traders to capture phases of mining capitulation and recovery, which can significantly influence BTC price movements. CoinWarz says the market is now at the capitulation point, when mining costs exceed profitability.
Historically, when the hash ribbon signals capitulation, it has marked a price bottom for BTC. Data from Glassnode show that miner capitulation started at the beginning of February. BTC’s price has also dropped by about four per cent for the month-to-date.
If the pattern holds, CoinWarz says Bitcoin's new bottom will sit at around USD 91,000. The previous capitulation point happened in October 2024, just prior to BTC rocketing upward by 50 per cent.
The parallel rise in Bitcoin’s mining difficulty metric has been caused the rising hash rate for BTC transactions, which hit a new all-time high on February 5th. As difficulty rises, mining gets harder, requiring more computing resources, time, and energy.
Glassnode says recent mining production data reflects this, as only one publicly-traded mining company, Riot Platforms (RIOT), reported a month-over-month production increase in January 2025.
Taken together, the figures suggest that the world’s number one crypto is following a trajectory last seen in 2017, up by about 525 per cent from the 2022 low reached in the aftermath of the FTX collapse. At the same stage in the 2017 cycle, BTC had risen by approximately 530 per cent.
In October 2023, BTC’s mining difficulty reached a new high when it rose by 6.48 per cent, significantly raising the computational bar for miners seeking to uncover blocks.
Data from CoinWarz tracked the required number of hashes needed to mine a block at 61.02 trillion, marking the third consecutive rise in difficulty faced by miners since August of that year, and nearly double the difficulty level reached in October 2022.
Bitcoin's network is set to readjust every 2,016 blocks (in practice this has meant roughly once a fortnight), as the blockchain measures whether mining activity has increased or reduced the time needed to find a new block. An increase in time usually means more miners have joined the network.
The network responds by raising the level of mining difficulty. The complex equations that need to be solved become even more complex, and miners have to apply more computational power in order to mine a block.
Some analysts blamed the spike in activity on the upcoming Bitcoin halving, which was then about six months away.
In an interview with Bloomberg, Jeffery May, an executive with crypto exchange BTSE, said that the surge in mining activity ‘probably (meant) everyone is trying to maximise returns before next year’s halving. After it happens, the rewards for BTC mining will be cut by fifty per cent. Miners are surely trying to wring every bit of value out of their equipment before the cutoff.’
‘We expect to see a rush of miners coming online between now and April 2024. It will be in every miner’s interest to maximise use of their equipment at the current payout rate of 6.25 BTC/per block. After the halving that drops to 3.125 BTC/block.’
Significant changes in mining activity usually signal that something is afoot in the crypto trading market. It might be an upcoming network event like the planned halving for BTC, or indicate that gains or losses for a given crypto asset are imminent.
In February 2023, leading Bitcoin Miner Iris Energy said that its hash rate was rising again after a notable downturn at the end of 2022. The company’s self-mining capacity rose from two exahashes per second to five.
A single exahash equates to one quintillion hashes, which represent possible solutions to the complex math equations required to approve and confirm a Bitcoin transaction.
According to figures from Glassnode, BTC's price rise above USD 20,000 helped push the average Bitcoin miner back into the black, even taking into account the hefty costs of operating a mining machine.
A press release on Iris Energy’s website said the firm had also agreed a financing deal with Bitmain, the manufacturer of Antminer cryptocurrency mining servers, to purchase a round of new S19j Pro miners. That expanded Iris’s data centre capacity by 4.4 exahashes per second.
The rise in Iris’s hash rate was enough to overcome a loss of 3.6 exahashes experienced in November 2022. The downturn in transaction volume forced it to mothball some of its mining infrastructure, which is also collateral for loans worth ca. USD 100 million.
Like many mining firms in late 2022, Iris found itself in a squeeze between spiking energy costs and cratering BTC prices. Cash flow fell to a trickle and made it difficult to cover payments to creditors.
Core Scientific, America’s biggest Bitcoin mining facility, ended 2022 with a bankruptcy filing. Another large firm, Argo Blockchain, saw its business crippled in December by a polar vortex winter storm that closed its Texas data centre.
After the turnaround, Iris said that its obligations under the 10 exahash contract with Bitmain had been fully resolved, leaving the company free of debt.
While it was too early to declare that good times had returned for crypto traders, there were other, earlier signs that crypto market might be on the up.
Ahead of BTC's Q1 2023 price rise, analysts noted an extended correlation between BTC’s price and the price of gold in late October 2022. It suggested that investors were using BTC as a hedge against broader volatility, particularly in stock markets. For an asset traditionally shunned by investors because of its penchant for sudden and dramatic dips and spikes, that represented a notable shift.
