Core Insights - Bitcoin's mining difficulty experienced an 11.16% drop to 125.86 trillion, marking the largest single negative adjustment since the mining ban in China in July 2021 and the 10th largest negative percentage adjustment in history [2][5] Mining Difficulty and Hashrate - The difficulty adjustment occurred at block height 935,424, with average block times increasing to approximately 11.4 minutes, exceeding the protocol's target of 10 minutes [3] - The decline in mining difficulty was driven by a 20% drop in the network's total hashrate over the past month, with Luxor's Hashrate Index reporting an 11% decrease in the past week to around 863 EH/s, down from previous highs above 1.1 ZH/s [4][5] Market Conditions - Bitcoin's price has fallen over 45% from its all-time high of above $126,000 in October, dropping to around $60,000 before rebounding to approximately $68,800, influenced by high Treasury yields, ETF outflows, and a risk-off sentiment in equities and commodities [5] - U.S. spot bitcoin ETFs have turned net sellers in 2026, indicating a shift in market dynamics [5] External Factors - Winter Storm Fern in late January caused miners in the U.S. to reduce operations, resulting in a loss of approximately 200 EH/s, with Foundry USA's hashrate dropping around 60% [6] Miner Revenue Metrics - Hashprice, which measures expected miner revenue per unit of computing power, reached an all-time low of $33.31 per petahash per second per day on February 2, with a daily average low of $34.91/PH/s/day on February 1, indicating financial pressure on miners [7] - The $40/PH/s/day level is considered the threshold for miners to decide on the viability of continuing operations [7] Equipment Performance - Only the latest Antminer S23 series machines are currently yielding healthy returns, while older models like Whatsminer M6 and Antminer S21 are nearing unprofitability or already operating at a loss [8] Historical Context - The recent adjustment significantly surpasses the previous largest negative difficulty drop of approximately 7.5% in June 2025, which was also related to external factors affecting hashrate [9]