Author: Vince Quill, CoinTelegraph; Compiler: Wuzhu, Golden Finance
The BTC mining hash rate, or the total computing power in the network, will slow down due to the reduction in mining difficulty and the reduction in mining hardware pre-orders.
According to data from CryptoQuant, on January 27, the mining difficulty dropped to 108.1 trillion, the first reduction in 2025, and the current hash rate is about 832 exahashes per second (EH/s).
Data compiled by TheMinerMag also showed that the mining difficulty has retreated 2.12% in the past seven days. According to its pre-order data, demand for application-specific integrated circuits (ASICs) and other mining hardware from U.S. companies declined in the third and fourth quarters of 2024.
The difficulty reduction should provide some respite to companies in the competitive industry, which face historically high difficulty rates in 2024 and early 2025, along with a reduction in the block subsidy for mining.
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Current Bitcoin mining difficulty. Source: CryptoQuant
Mining Companies Diversify but Still Struggle
In 2024, mining companies diversified their businesses into artificial intelligence and high-performance computing data centers to make up for the shortfall in mining profits after the halving.
Bitcoin miners also adopted Bitcoin corporate financial strategies, allocating more financial reserves to BTC to capture long-term price appreciation.
Despite diversification, hedging strategies, and the historic Bitcoin price rally in November 2024, mining stocks have struggled to keep up with BTC’s gains.
Data from HashRate Index shows that 20 of 25 publicly traded mining companies saw year-to-date share price declines by the end of 2024.
Mining stocks took another hit following the release of DeepSeek R1, a generative AI model built in China that performs on par with OpenAI’s offering but at a fraction of the cost to train.
DeepSeek upends conventional wisdom around AI development, including the cost of training and scaling it, which the DeepSeek team reportedly accomplished using limited hardware.
The Chinese AI, which cost just $6 million to train, shocked the U.S. stock market as more than $1 trillion in shareholder value was wiped off in a single day for AI companies, including Nvidia.
Investors dumped AI stocks over concerns about DeepSeek’s impact on revenues from its multi-billion-dollar data center business and high-end AI processors.