The Bitcoin (BTC) mining hashrate — the total computing power in the network — is set to slow due to a reduction in mining difficulty and reduced preorders for mining hardware.
According to data from CryptoQuant, the mining difficulty fell to 108.1 trillion on Jan. 27 — the first reduction of 2025 — while the current hashrate is approximately 832 exahashes per second (EH/s).
Data compiled by TheMinerMag also shows a 2.12% retrace in mining difficulty over the past seven days. According to its preorder data, the demand for application-specific integrated circuits (ASICs) and other mining hardware by US firms has decreased in the third and fourth quarters of 2024.
The difficulty reduction should be a reprieve for companies in the highly competitive industry, which faced all-time high difficulty rates in 2024 and early 2025, while mining with a reduced block subsidy.
Current Bitcoin mining difficulty. Source: CryptoQuant
Related: Grayscale launches Bitcoin Miners ETF to offer BTC mining exposure
Mining companies diversify operations but still struggle
Mining companies diversified into AI and high-performance computing data centers in 2024 to make up for the shortfall in mining profits post-halving.
Bitcoin miners also adopted a Bitcoin corporate treasury strategy and allocated more of their treasury reserves to BTC to capture long-term price appreciation.
Despite the diversification, hedging strategies and a historic Bitcoin price rally in November 2024, mining stocks struggled to keep pace with BTC gains.
Data from the HashRate Index shows that 20 out of the 25 publicly listed mining companies finished 2024 with a year-to-date decline in share prices.
Mining stocks took another hit following the release of DeepSeek R1, a generative AI model built in China that performs on par with OpenAI products but was trained for a fraction of the cost.
DeepSeek has upended the conventional wisdom surrounding AI development, including the costs of training and scaling AI, which the DeepSeek team allegedly did using limited hardware.
The China-based AI, which only cost $6 million to train, shook the US stock market as more than $1 trillion in shareholder value was liquidated from AI companies, including Nvidia, in a single day.
Investors sold AI stocks, fearing the revenue implications of DeepSeek on the multibillion-dollar data center business and high-end AI processors.
Magazine: AI may already use more power than Bitcoin — and it threatens Bitcoin mining