Bitcoin Mining Faces Historic Difficulty Drop Amid Profit Squeeze, Tariff Pressures, and Strategic Pivots

Bitcoin miners are facing their biggest challenge since China’s 2021 ban, as the network hashrate plunged nearly 30% in early June 2025—setting the stage for a projected 9% drop in mining difficulty. At the same time, U.S. tariffs on mining hardware and intensifying competition from AI infrastructure are squeezing margins across the industry.

Yet, despite mounting pressure, the sector is also seeing signs of resilience and strategic adaptation, from May’s brief profitability rebound to Canaan’s renewed focus on core crypto infrastructure.

Historic Mining Difficulty Drop Looms

The anticipated 9% drop in Bitcoin mining difficulty comes as miners struggle with low margins. With Bitcoin prices declining from the $90,000-$105,000 range in June, many miners have been forced to reduce their hashrate or sell holdings.

For instance, a 390 TH/s rig with 7,215 watts and $0.05/kWh electricity costs yields just $11.76 in daily profit. This has led to miners selling assets at historic lows, signaling intense market pressure. While the difficulty drop may offer temporary relief, long-term sustainability remains a concern due to high energy costs and growing competition from AI-driven infrastructure.

Profitability Surge in May Meets June’s Challenges

Despite current headwinds, the mining sector experienced a moment of reprieve in May. Bitcoin mining profitability surged by 18.2% during the month, driven by a 20% increase in Bitcoin’s price to approximately $105,964.76, while network hashrate grew by only 3.5%.

North American miners capitalized on this trend, increasing their share of global hashrate from 24.1% in April to 26.3% in May. U.S.-listed mining firms collectively produced 3,754 Bitcoins in May, up from 3,278 the previous month, according to a research report released Monday by investment bank Jefferies.

Among these firms, MARA Holdings (MARA) led the group by mining 950 Bitcoins, a 35% month-on-month increase, followed by CleanSpark (CLSK), which mined 694 tokens. The surge in production reflects how miners capitalized on favorable market conditions, including rising investor demand for inflation-resistant assets amid growing U.S. fiscal deficits.

However, the sharp contrast between May’s gains and June’s difficulties underscores the volatility and uncertainty that continue to define the Bitcoin mining industry.

Tariffs Reshape U.S. Bitcoin Mining Landscape

The U.S. Bitcoin mining industry now faces additional challenges as new tariffs on imports from Southeast Asia and China, ranging from 10% to 50%, raise costs for miners reliant on hardware like ASICs. Chinese manufacturers dominate over 90% of the global Bitcoin mining hardware market, producing the vast majority of ASICs.

While some reports estimate the mining hardware market could reach $120 billion by 2028, more conservative data from 360 Research Reports projects growth to $12.8 billion by 2028. MarketsandMarkets forecasts a compound annual growth rate (CAGR) of 13.9% through 2030.

To adapt, U.S. miners are sourcing second-hand equipment and exploring local production with Chinese manufacturers like Bitmain and MicroBT to mitigate tariff impacts. However, experts note that tariffs are only part of the challenge. Competition for electricity from AI data centers and a scarcity of ideal mining locations in the U.S. may pose greater risks to the industry’s long-term expansion.

Canaan Exits AI to Refocus on Bitcoin Mining

In response to these industry-wide pressures, some companies are reevaluating their business strategies. Canaan Inc., a Singapore-based manufacturer of Bitcoin mining hardware, has announced i its decision to exit the artificial intelligence (AI) semiconductor business to refocus on its core cryptocurrency operations.

Canaan, known for its Avalon mining rigs, has been exploring options for its AI unit since March 2022. With the phase-out now underway, the company expects a significant reduction in operating costs, aligning with the broader trend of prioritizing core crypto infrastructure over diversification.

The company’s AI chip unit contributed only $900,000 in revenue in 2024 while accounting for 15% of its operating expenses.

"I believe that doubling down on our core strengths in crypto infrastructure and bitcoin mining is the most strategic path forward for Canaan," said Nangeng Zhang, chairman and chief executive officer of Canaan Inc. "By focusing our resources and talent on the areas where we have deep expertise and competitive advantage, we aim to drive sustainable growth, unlock long-term shareholder value, and continue playing a central role in the global crypto ecosystem."

Will Bitcoin Miners Survive the Squeeze?

As Bitcoin mining enters a critical juncture—marked by price volatility, regulatory friction, and technological disruption—the industry faces pressure from all sides. Yet amid uncertainty, miners and hardware providers are making bold moves to adapt.

Whether it’s cutting-edge deployment during favorable market windows, or strategic restructuring away from non-core ventures, the coming months will reveal which players can weather the storm—and who will be left behind.