Bitcoin Difficulty Reaches Record High Amid Miner Capitulation
Bitcoin (BTC) has recently seen its mining difficulty soar to an unprecedented level of 114.7 trillion (T), following a notable 5.6% increase over the past weekend, as reported by CoinWarz. This surge in difficulty coincides with signals from the Hash Ribbon metric, which is often indicative of miner capitulation. Miner capitulation occurs when the costs associated with mining exceed the potential profitability, leading to a significant decrease in mining activity.
According to data from Glassnode, the phase of miner capitulation began in early February, with Bitcoin’s value declining over 4% month-to-date. Historically, when the Hash Ribbon metric indicates capitulation, it has frequently marked local price bottoms for Bitcoin. If this historical pattern holds true, analysts suggest that Bitcoin’s price could find a temporary bottom around $91,000. The last instance of the capitulation signal occurred in October 2024, shortly before Bitcoin experienced a remarkable surge of 50%.
The recent increase in mining difficulty is primarily attributed to Bitcoin’s rising hash rate, which reached an all-time high on February 4. The adjustment of mining difficulty occurs every 2,016 blocks, aiming to maintain an average block time of 10 minutes.
As mining difficulty continues to climb, the competition among miners intensifies, creating additional pressure on their operations. This trend is evident in January’s production data, which highlighted that Riot Platforms (RIOT) was the only major public miner to report an increase in production month-over-month.
