Bitcoin mining sector shows signs of distress after peak difficulty

Bitcoin (BTC) is testing the limits of miners, as even the best pools and facilities are having a hard time with peak difficulty. The last few weeks have formed a ‘hash ribbon’, where mining becomes unsustainable and leads to selling and capitulation. 

Bitcoin is testing the limits of all types of miners while pressuring the stock of corporations with mining farms. The recent peak difficulty put all miners in a situation of high demand amidst a sinking market price. During peak difficulty times, miners often see the signal of a ‘hash ribbon’, which often leads to selling capitulation. This time, the ‘hash ribbon’ appeared on February 6, and has extended the challenging mining conditions for weeks. 

A hash ribbon is not necessarily a bearish sign, though it may lead to short-term selling and a market bottom. The mining process and competition can readjust, leading to a more balanced process of new coin production. At the same time, a hash ribbon is historically a period of market turbulence, often followed by a local bottom and a continuation of the bull market. 

The BTC rallies also historically follow the full miner capitulation, where the hash ribbon signal dissipates. Hash ribbon conditions for miners can last as long as 2-3 months, depending on the interplay between miner capacity and current market prices.

As of February 2025, BTC miners are above breakeven, though for newer miners, the price of a new coin may be as high as $92,000. The recent miner distress period arrives at a time when BTC trades sideways, dipping under the $95,000 range. BTC slid to $94,599.75 after a turbulent day, despite the extreme scarcity of newly produced coins. 

Miners are slowing down their activity to decrease difficulty

Bitcoin miners are in the midst of buying new equipment and until recently achieved peak hashrate. Now, after relentless difficulty increases, the hashrate is starting to drop, signaling miners may be shutting down in a bid to decrease facility. 

In highly competitive mining, peaking above 835 EH/s, miners may pay high expenses, while not getting enough BTC as a reward. For that reason, mining power decreased again to 771 EH/s. The slower mining may result in a lowered difficulty during the next readjustment period, expected on March 10-11. 

The difficulty may be lowered between 3% and 9%, depending on miner engagement. While larger miners can try to drive smaller ones out of business, activity remains relatively expensive and close to breakeven. 

Foundry.USA still carries the biggest share of the known hashrate, producing 29.5% of blocks. Of that share, 28.5% is located in Texas, with the rest distributed among other states or countries.

Miners still retain 1.93M BTC in their reserves and have not engaged in rapid selling. However, even top pools are producing fewer blocks, while smaller miners can work for months without earning a block reward. 

Mining stocks trade near yearly low

Mining stocks were among the hot assets during the 2024 bull run. Currently, leaders like Mara Holdings (MARA) trade near a one-year low. MARA sank to $14.24 after a long-term slide, despite its recent rounds of buying more BTC. Mara Digital reached 50 EH/s in 2024, becoming one of the top solo mining facilities, but that was not enough to boost the stock price. 

The other big loser nearing capitulation levels is CleanSpark, Inc., one of the leading corporate miners with plans for clean energy and general data center construction. CLSK shares fell to $9.04, again nearing a yearly low. 

Smaller and niche mining companies also shed value, sinking rapidly in the past 24 hours. Shared mining, rented space, and rigs are still marketed to retail or even hobby buyers, but their viability is becoming more questionable. Most corporate miner stocks responded by erasing 10% to 20% in the past 24 hours. 

Mining treasuries remain unchanged, even after the latest purchase by MicroStrategy. The only exception is Metaplanet, which added another 69 BTC on Sunday. Corporate buyers are still seen as a potential source of demand for BTC, as they can easily acquire the new coins produced daily to keep a small treasury.

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