A $25,000 hole, and an 11% difficulty reduction doesn’t fill it. In February 2026, Bitcoin miners are experiencing the hardest month since the collapse of FTX.

The average comprehensive cost to produce a Bitcoin across the network has soared to $87,000, while the coin price repeatedly rubs against the $60,000 mark — miners incur nearly $20,000 in losses for each block they mine. This is the first time since the 2022 bear market that Bitcoin mining has seen widespread, systemic “underwater operation.”

On-chain data analysis firm CryptoQuant characterizes this current phase as “the surrender phase.” The last time this term was frequently mentioned was three years ago when China's ban caused a cliff-like drop in the overall network hash rate.

1. Inverted ledger: cost line like a ceiling, but coin price steps on the floor

● In October 2025, when Bitcoin reached its historical peak of $126,000, the mining community was still debating how many of the latest energy-efficient machines to order for the following year. No one anticipated that four months later the price would be halved.

● Unit hash rate profitability has dropped to about $35/PH, which is an unprecedented low since the inception of this sector. More critically, costs remain rigid — depreciation of mining machines has to be paid, along with rents for sites, and electricity contracts are signed annually. When the coin price fell below $68,000, the cash flow of the vast majority of miners turned negative.

● Internally, there is a “miner profit-loss sustainability index” which has a healthy line at 100, and currently, this number stands at 21. The interpretation is very harsh: Apart from a few top players whose electricity costs are below $0.05 per kWh and are fully equipped with the latest energy-efficient models, the profit margins on the books for most miners have been completely compressed to negative values.

This is not a gap that can be filled by refined operations. Even if you save on electricity costs and manage well, you cannot cover a $20,000 hole for each coin.

2. Mass exodus of hash rate: 11% difficulty reduction, a “painkiller” with insufficient dosage

The direct consequence of miners’ surrender is a noticeable retreat in the overall network hash rate.

● On February 9, the Bitcoin network triggered a single 11.16% mining difficulty reduction. This is the largest adjustment in almost four and a half years since the 27% drop in difficulty caused by China’s ban in 2021. From a technical principle, the reduction in difficulty aims to "lighten the load" on the surviving miners — with the same hash rate, it is now easier to mine coins. But this relief came too late and was far from sufficient.

● With a 45% cost-price inversion rate, paired with an 11% difficulty adjustment, it’s like a patient with a fracture only taking a single painkiller. For mid-sized and smaller mining farms with electricity prices above $0.05 per kWh, and for miners still using older models like the S19 series, this difficulty reduction is simply not enough to mitigate the financial risk of a complete shutdown.

The clearing of the hash rate market is still ongoing.

3. Cold winds and power outages: Texas mining farms colder under the harsh winter

North America's mining hub, Texas, is experiencing a particularly difficult winter this year.

● Winter storm Fern has swept across the U.S., covering 34 states and stretching over 2,000 square miles, with snow, ice, and power outages occurring in rotation. The Electric Reliability Council of Texas activated emergency plans, and some industrial loads were forced to undergo power restrictions — residential electric heaters are prioritized over mining machines.

● As one of the largest mining pools globally, Foundry USA temporarily lost about 60% of its hash rate during this storm, dropping sharply from nearly 400 EH/s to about 198 EH/s. Although it gradually recovered afterward, this power outage served as a wake-up call for all miners: the electricity contract you signed is just a piece of paper in extreme weather conditions.

● The combination of miners actively shutting down and being passively limited by power restrictions led to that historic difficulty reduction on February 9. Ironically, after the weather warms up and power is restored, the difficulty is expected to rise again by over 5% on February 20. The window for survivors to breathe is only a few days.

4. Wall Street votes with their feet: mining company stocks drop to “bankruptcy prices”

The capital market is much more sensitive to changes than adjustments in mining difficulty.

● U.S.-listed mining companies faced a widespread sell-off this week. Stocks of leading companies like MARA Holdings and Riot Platforms fell by over 20%. For example, MARA closed at $7.66, with a price-to-book ratio dropping to 0.56 — the market values this company's mining machines, facilities, and electricity capacity at only 50-60% of their worth.

● The flow of funds clearly indicates a risk-averse attitude: a large amount of capital is retreating from high-volatility crypto assets and returning to traditional safe-haven products like gold. Wall Street is no longer interested in the “halving next year” narrative; they are only asking one question: What else can your mining farm do besides mining Bitcoin?

5. From “miner” to “AI landlord”: an involuntary emergency landing

Facing this survival crisis referred to internally as the “2026 winter of mining,” leading companies are not passively waiting for a price recovery.

● The logic is actually quite simple: a mining farm is essentially a large-scale, low-latency data center with ready-made power capacity, cooling systems, and rack space. These resources are a cost burden during the Bitcoin bear market but can be leased as scarce assets in the era of generative AI's computing shortages.

IREN and Core Scientific have taken the lead in converting some data centers to support generative AI businesses, securing stable cash flow far exceeding that of mining through long-term contracts.

● The most decisive transformation is by Bitfarms. This once-leading pure mining player has recently announced a complete exit from Bitcoin mining, focusing its future strategy entirely on the AI sector. Following this news, the stock price even rose — the market rewards companies that shed the “Bitcoin” label with real money.

Cango provides a more complete example of transformation.

● From February 8 to 9, this mining company sold 4,451 Bitcoins on the open market, averaging about $68,500, realizing a total of $305 million. These funds were not used to scoop up new mining machines but were all directed towards repaying Bitcoin-backed loans, strengthening the balance sheet, and expanding into the AI computing infrastructure sector.

● Cango has a concrete plan: leveraging over 40 globally distributed sites, deploying modular, containerized GPU computing nodes, targeting the long-tail inference needs of small to medium enterprises. They also recruited technology executive Jack Jin from Zoom to serve as CTO of the AI business line, focusing on large-scale GPU clusters and machine learning infrastructure.

This is not a cross-industry shift; it is simply changing the plugs in the same factory from mining machines to GPU servers.

6. Extreme signals from the market: 5.65 standard deviations, and only 13 occurrences in history

● Amid pessimism, some technical analysts have noticed unusual signals.

● The recent price volatility of Bitcoin has reached 5.65 standard deviations. In over 5,000 trading days of history, this level of extreme volatility has only occurred 13 times — the last instances were in December 2018 and March 2020.

● Historical experience indicates that such degrees of volatility often appear near the bottom of a cycle. Of course, this does not mean a reversal will happen immediately; the market could very well continue to hover for months. But at least it indicates: sentiment has become extremely pessimistic, rather than neutral.

In the short term, unless the coin price can quickly recover the $80,000 mark, the situation of “production equals loss” will continue to force high-cost miners out of the game. This historic difficulty reduction has only given survivors a little breathing space; it is far from the moment of reversal.

But the hash rate has not disappeared; it is merely changing form.

Companies that successfully convert their power licenses, rack space, and cooling systems into GPU service contracts will gain new identities in the next technological cycle. They will no longer be Bitcoin miners but AI computing landlords.

For those who still persist in mining, the current coin price is both a test and a gauge — it marks the darkest moment of this cycle and also indicates the entry coordinates for survivors.

This industry never believes in sentiment; it only believes in the shutdown price.

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