The situation for Bitcoin miners has become truly serious. When difficulty drops by 7.8%, it means losing about $19,000 per coin, and currently, with the market price around $72,770, average production costs are close to $88,000.

What is causing this level of squeeze? On one hand, rising energy prices; on the other, geopolitical tensions in the Middle East. When oil prices exceed $100, electricity costs are directly affected. The de facto closure of the Strait of Hormuz, which controls about 20% of the world's oil and gas flow, is reducing hash rate, increasing block times, and sharply decreasing network difficulty.

The latest difficulty adjustment occurred on Saturday with a 7.76% decrease. The network has now fallen to 920 EH/s, whereas it reached 1 zettahash in 2025. Average block times have extended to 12 minutes and 36 seconds, well above the targeted 10 minutes. Hashprice hovers around $33 per petahash per day, which is close to the break-even point for most hardware.

What do miners do when they can't cover costs? They sell Bitcoin. This adds supply pressure to an already strained market. Especially publicly traded mining companies are diversifying into AI and high-performance computing to offset these losses. Players like Marathon Digital and Cipher Mining have started expanding their data center capacity. Mining is no longer as profitable as it used to be.

The market structure has also become interesting. Bitcoin's price has remained in a relatively narrow range between $65,000 and $73,000 over the past six weeks, but this stability is misleading. Purchases are increasingly driven by a shrinking group of institutional players. US spot Bitcoin ETFs and a few other channels are covering most of the sustainable buying.

Mining economics is not just a sector story; it’s a market structure story. As participants exit, the network corrects itself and makes mining cheaper. But when costs exceed revenues, it harms both miners and the spot market that absorbs their forced sales. A new difficulty adjustment is expected at the beginning of April, and data shows further declines. If Bitcoin continues to stay below $88,000, miner exits will accelerate, and difficulty will keep decreasing.