Liquidity Crunch in Cryptocurrency Mining: Background and Causes
Since April 2024, when Bitcoin completed its fourth halving, the cryptocurrency mining industry has been facing an unprecedented liquidity crunch. Block rewards were reduced from 6.25 BTC to 3.125 BTC, directly halving miners’ revenue.Meanwhile, after reaching a new high of over $120,000 in 2025, the price of Bitcoin had fallen to approximately $63,100 as of July 31, 2026—a decline of nearly 50% from its peak.The double blow of falling prices and the reward halving has left many miners facing losses of up to $19,000 for every Bitcoin mined.
In addition to the sharp drop in revenue, rising operating costs are also a key factor contributing to liquidity constraints. Fluctuations in energy prices and the inefficiency of outdated mining rigs—which fail to cover operating costs—are forcing miners to shut down their equipment. Furthermore, the debt burden accumulated earlier to scale up operations has become particularly heavy during the market downturn, further exacerbating financial pressures.
Analysis of the Current State of Cryptocurrency Mining in 2026
Changes in Hashrate and Mining Difficulty
- Hashrate Continues to Decline: As of July 29, 2026, the seven-day average network-wide hashrate on Bitcoin was approximately 868 EH/s, down from the peak of over 1 ZH/s (1,000 EH/s) reached at the end of 2025, and has been declining for nearly 287 days.The first quarter of 2026 marked the first quarterly decline in hash rate in six years, with a decrease of approximately 4%.
- Mining Difficulty Declines: Mining difficulty fell by 19% from its peak of approximately 156 trillion in November 2025 to 126.23 trillion in July 2026—one of the sharpest declines since ASICs replaced GPUs.The decline in hash rate and mining difficulty reflects that some miners have exited the market or phased out inefficient equipment.
Miners’ Response Strategies and Business Transformation
Faced with a challenging market environment, cryptocurrency miners are actively adjusting their strategies:
- Bitcoin Sales: In the first quarter of 2026, publicly traded mining companies sold over 32,000 BTC—a figure that even exceeded the total for the entire year of 2025. This move aims to raise cash to repay debt, cover operating costs, and support data center construction.
- Shift to AI and High-Performance Computing (HPC): Many major mining companies, such as Hut 8, Core Scientific, TeraWulf, and Riot Platforms, are shifting or expanding their business focus toward AI and high-performance computing (HPC) contracts.For example, Hut 8 has signed a 15-year lease agreement to supply 352 megawatts of power to its Beacon Point campus, bringing the total value of its AI contracts to $26.6 billion, with initial delivery scheduled for the second quarter of 2028. This transition aims to leverage its existing energy infrastructure and data center capabilities to tap into new revenue streams.
- Equipment Upgrades and Energy Optimization: Miners are phasing out outdated, inefficient mining rigs and actively seeking cheaper, more sustainable energy sources to reduce operating costs and enhance competitiveness.
Market Performance and Industry Challenges
- Mixed Performance of Mining Stocks: Despite the decline in Bitcoin prices, shares of some mining companies performed exceptionally well in the first half of 2026, with gains ranging from 45% to 135%. This was primarily because investors began viewing them as energy and AI infrastructure stocks rather than merely leveraged exposure to Bitcoin.
- Bankruptcy Cases: Poolin, once one of the world’s largest Bitcoin mining pools, filed for Chapter 11 bankruptcy protection in 2026 following a liquidity crisis in 2022, highlighting the harsh reality of industry consolidation and consolidation.
- Regulatory and Environmental Considerations: Regulators and policymakers continue to monitor the impact of cryptocurrency mining on electricity costs, grid reliability, and carbon emissions, requiring miners to be more responsible and efficient in their energy usage.
Summary
The liquidity crunch in the cryptocurrency mining industry is the result of multiple overlapping factors, including the Bitcoin halving, price corrections, rising operating costs, and debt pressures. The industry is undergoing a profound shake-up and transformation, with miners adapting to the new market landscape by selling assets, optimizing operations, and expanding into emerging fields such as AI and HPC.In the future, the survival and development of the mining industry will rely increasingly on cost control, technological innovation, and business diversification.
