UPDATED: MINING DIFFICULTY HAS FALLEN YEAR OVER YEAR TWICE IN BITCOIN'S LIFE — THE FIRST TIME CHINA BANNED IT, THIS TIME THE MINERS TOOK A BETTER OFFER — THE BLOCKS NEVER STOPPED EITHER TIME
Rapha Zagury runs Twenty One Capital. We wrote about him on August 12. This week he said Bitcoin is living through “the first bear market in hash rate that we've ever seen.”
He is close to right, and the number underneath is better than the phrase. Mining power peaked late last year and sits about 17 percent below that mark. It is the longest Bitcoin has ever gone under a record without taking it back.
Here is the part nobody printed today. Difficulty — the setting that decides how hard it is to win a block — has fallen year over year exactly twice. The first was mid-2021, when China banned mining and roughly half the network went dark in weeks. The second is now.
The difference is who did it. In 2021 a government took the machines. This time nobody took anything. Keel shut down every American machine it owned and walked away with $819 million. Bitdeer signed sixteen years and $4.7 billion for 121 megawatts. Hut 8 took $9.8 billion over fifteen years for 352 megawatts in Texas.
Zagury also said there is not really anybody left staying the course to mine at scale. We wrote this morning, about a company that switched its Michigan machines off Tuesday, that somebody always stays. We should say which one we meant. He is describing public miners, and a listed company owes an answer every ninety days. AI pays more per megawatt today, so the operators with shareholders are the ones who go. That decides who leaves. It does not decide whether the machines run.
Difficulty is the part that does not care. It fell about ten percent in June and a block still showed up every ten minutes, the same as it did when China pulled the plug. The miners are not quitting. The shareholders are.
UPDATED 5:55 PM ET. Four hours after we ran this, August's numbers landed and they say the same thing from the other side. Miners took in $1.008 billion last month, the best month since May. What a miner earns per unit of computing power is now $38.86. In June it was $27.67, within a cent of the record low. Up forty percent while the machines were walking out the door. That is the argument in one number. Fewer people mining, more money for whoever stayed.
One more figure from the same report, and it is the uncomfortable one. Of that billion dollars, fees paid by users came to $7.1 million. Seven tenths of one percent. Everything else was the block subsidy, which halves. The people who stayed are being paid almost entirely by a schedule that shrinks on purpose. Technologist.
He is close to right, and the number underneath is better than the phrase. Mining power peaked late last year and sits about 17 percent below that mark. It is the longest Bitcoin has ever gone under a record without taking it back.
Here is the part nobody printed today. Difficulty — the setting that decides how hard it is to win a block — has fallen year over year exactly twice. The first was mid-2021, when China banned mining and roughly half the network went dark in weeks. The second is now.
The difference is who did it. In 2021 a government took the machines. This time nobody took anything. Keel shut down every American machine it owned and walked away with $819 million. Bitdeer signed sixteen years and $4.7 billion for 121 megawatts. Hut 8 took $9.8 billion over fifteen years for 352 megawatts in Texas.
Zagury also said there is not really anybody left staying the course to mine at scale. We wrote this morning, about a company that switched its Michigan machines off Tuesday, that somebody always stays. We should say which one we meant. He is describing public miners, and a listed company owes an answer every ninety days. AI pays more per megawatt today, so the operators with shareholders are the ones who go. That decides who leaves. It does not decide whether the machines run.
Difficulty is the part that does not care. It fell about ten percent in June and a block still showed up every ten minutes, the same as it did when China pulled the plug. The miners are not quitting. The shareholders are.
UPDATED 5:55 PM ET. Four hours after we ran this, August's numbers landed and they say the same thing from the other side. Miners took in $1.008 billion last month, the best month since May. What a miner earns per unit of computing power is now $38.86. In June it was $27.67, within a cent of the record low. Up forty percent while the machines were walking out the door. That is the argument in one number. Fewer people mining, more money for whoever stayed.
One more figure from the same report, and it is the uncomfortable one. Of that billion dollars, fees paid by users came to $7.1 million. Seven tenths of one percent. Everything else was the block subsidy, which halves. The people who stayed are being paid almost entirely by a schedule that shrinks on purpose. Technologist.
BITCOIN.COM · Wed Sep 2 · Zagury quotes, Keel/Bitdeer/Hut 8 figures, data credited to Hashrate Index · + BLOCKSTATS: BLOCKSPACE Jul 28 for the two-in-history difficulty record and the June figures, also Hashrate Index · + CRYPTO.NEWS Sep 2 · + BITCOIN.COM Sep 2, 5:45 PM ET (Jamie Redman) for August revenue, hashprice and the fee share, per newhedge.io and Hashrate Index · June hashprice from the Jul 28 Blockspace piece, not a current print · anchors: our Hyperscale and MISO stories today, our Zagury story Aug 12