Recent data highlights a notable decline in Bitcoin’s network hashrate, which has dropped approximately 15% from its peak in October, affecting miners significantly. Following a period of over 60 days where miners have capitulated, the average hashrate has decreased from around 1.1 ZH/s in October to approximately 977 EH/s. This trend indicates that many miners are shutting down their machines or ceasing operations altogether due to declining profitability.
According to Glassnode’s Hash Ribbon indicator, which tracks trends in short- and long-term hashrate to reflect miner activity, a reversal was noted on November 29. The combination of supply-side pressure in the Bitcoin market is leading to expectations of an additional decrease in mining difficulty, projected to decline for the seventh time in eight adjustments, reaching about 139 T by January 22.
JPMorgan’s analysis reveals a month-on-month decrease of around 3% in the network hashrate, dipping to 1,045 EH/s in December. While this slight easing in competition could be beneficial for some, mining profitability remains under considerable pressure. The average daily block reward income per EH/s fell to $38,700 in December 2025, marking a 7% drop from November and a staggering 32% decrease year-on-year, reaching an all-time low.
A report from VanEck sheds light on the mounting challenges facing Bitcoin miners. The halving of block subsidies consistently reduces miners’ revenues in a step-like manner, while from 2020 onwards, the network hashrate has grown at a compound annual rate of about 62%. To remain competitive, miners are increasingly compelled to invest heavily in capital expenditures to boost their hashrate. If Bitcoin prices do not recover sufficiently to counteract subsidy declines and escalating costs linked to higher hashrate, miners will likely experience ongoing profit margin compression.
The worsening economic conditions for miners are visible in the breakeven electricity prices. For instance, the breakeven price for the 2022-generation S19 XP miner fell from roughly $0.12/kWh in December 2024 to about $0.077/kWh in December 2025. This trend underscores the increased reliance on low-cost electricity resources and the importance of operational efficiency in maintaining mining viability.
Despite the substantial overall growth in the network’s computing power since 2020, the 30-day moving average indicates a 4% decline in computing power recently, with a drop that marks the largest since April 2024. Additional disruptions have also contributed to this scenario, including the shutdown of approximately 1.3GW of mining capacity in Xinjiang due to regulatory actions, which resulted in around 400,000 mining machines going offline.
As mining operations struggle, a Guojin Securities report reveals that by the third quarter of 2025, the mining costs for U.S.-listed companies, including depreciation, have escalated to $112,000, exceeding Bitcoin’s current market price. The infrastructure owned by these companies is strategically situated near major urban areas, making it ideally positioned for transitioning into AI cloud services. The accelerating demand for AI computing power suggests an inevitable shift of cryptocurrency miners toward AI data centers.
By 2027, fourteen major U.S.-listed mining firms are projected to reach a power capacity of 15.6GW, focusing on cloud computing leasing and IDC power leasing as core business models. These transformations are occurring across two primary models: one is akin to CoreWeave and Nebius, where chips are procured for leasing cloud computing; IREN operates under this framework and has collaborated with Microsoft for substantial capacity. The second model resembles IDC power leasing, where the data center’s infrastructure is leased out.
Despite ongoing challenges, the VanEck report notes that a decrease in the hashrate might positively influence Bitcoin’s future. Historical patterns reveal that when computing power declines, the likelihood of achieving positive returns over the subsequent 90 and 180 days increases. Analysis from previous years shows a 77% probability of positive 180-day returns after a negative 90-day computing power growth, consistently yielding returns considerably exceeding expectations.
This evolving landscape points toward the potential for longer-term stability and profitability for the Bitcoin mining sector, even amidst current pressures. The industry may face consolidation and centralization, but this need not spell doom for miners, as engaged participants continue to adapt and invest in future operations.
