Bitcoin mining difficulty and its impact on profitability in 2025–2026

Bitcoin mining difficulty is one of the key network parameters that determine how hard it is for miners to discover new blocks and earn rewards. This metric reflects the level of competition within the network and directly impacts mining profitability. As difficulty increases, the amount of Bitcoin produced by the same hardware within the same period decreases, thereby reducing income per unit of hash power.

Mining difficulty is determined by the total network hash rate and is automatically adjusted by the Bitcoin protocol. When miners increase their hash rate, the total network hash rate rises, and difficulty also increases accordingly. Therefore, unless Bitcoin prices rise in tandem, mining rewards will decline. This is also why mining difficulty’s impact on profitability remains a core focus of the industry.

The difficulty adjustment mechanism is built directly into the protocol and is activated every 2,016 blocks, with adjustments approximately every two weeks. Its purpose is to keep the average block time around ten minutes. When hash rate increases, difficulty rises; when hash rate decreases, difficulty falls, allowing the network to automatically adapt to changes in miner activity without external intervention.

The period from late 2025 to early 2026 is a typical time for dynamic changes in mining difficulty. According to data from CloverPool analysis pool, Bitcoin mining difficulty in January 2026 decreased by about 1.2%, down to approximately 146 trillion, marking the fourth adjustment within two months. This adjustment mainly resulted from the decline in total network hash rate after the peak in fall 2025, reflecting the temporary shutdown of some unprofitable mining machines.

Despite these periodic reductions, the overall Bitcoin mining difficulty in 2025–2026 remains at a historical high. Intense competition means that even if BTC prices rise, mining profits may not increase proportionally. Difficulty tends to increase faster than prices, leading to a decrease in revenue per second per terahash, further squeezing profit margins.

Bitcoin price, total network hash rate, and mining difficulty form a highly interconnected system. Price increases stimulate investment in new equipment and capacity expansion, driving hash rate higher and consequently increasing difficulty. As a result, some of the gains from price rises are offset. Only when the growth rate of Bitcoin prices exceeds the increase in network difficulty can mining profits achieve sustainable growth.

In an environment of difficulty fluctuations, miners must continuously optimize operations. Key factors include controlling electricity costs, improving hardware efficiency, and flexibly managing capacity. Well-funded companies will leverage periods of reduced network activity to optimize operations and prepare for the next growth cycle, while less risk-tolerant participants may choose to temporarily or permanently exit the market. These processes collectively drive the fluctuations in Bitcoin’s total network hash rate and mining difficulty during 2025–2026.