The state of Bitcoin mining: Hashrate peaks, difficulty drops, and weather defines the margins

Bitcoin’s mining infrastructure has expanded significantly this year. The 7-day average hashrate climbed over 900 EH/s in July, setting a new all-time high. However, a more interesting fact than the spike in hashrate is that this expansion has been met with a softening mining difficulty. This rare decoupling has allowed miners to increase revenue and margins even as fees fell to multi-year lows.

However, beneath the surface, operational limits are being tested. The Texas ERCOT grid is under pressure from record-breaking summer heat and power demand in the US. Meanwhile, southern China has faced the heaviest rainfall in decades, causing widespread flooding and disruption to hydroelectric output in provinces that host substantial mining activity. These external stressors are now playing a decisive role in shaping the pace and profitability of mining, while Bitcoin’s price and on-chain activity are becoming much less influential than before.

In this report, CryptoSlate will examine the implications of protocol metrics, energy markets, and infrastructure constraints in the mining sector. We will contextualize miners’ current economic state, outline the risks that could disrupt network growth, and offer a forward-looking view into Q3 and beyond.

The Bitcoin network began 2025 with steady throughput around 780 EH/s. By mid-June, it had climbed to 944 EH/s, a 21% increase. Though the rate flattened somewhat in July, the current 7-day average remains above 900 EH/s, solidifying 2025 as the most computationally intensive year in Bitcoin’s history.

However, difficulty has not kept pace. It peaked in early June at 126.9 trillion and has since slid to 126.3 trillion despite consistent hashrate levels. This softening was spread across five consecutive downward adjustments, the longest easing streak since 2024. With hash power increasing and difficulty falling, miners now earn more Bitcoin per unit of work than they did just one month ago.

This inversion of the usual hashrate-difficulty relationship has two major implications. First, it improves miner economics even without changes in BTC price or fee activity. Second, it implies that capacity constraints, rather than an absence of deployment, are holding back further network expansion.

Total daily miner revenue currently sits around $55.29 million, up 19% over the past 30 days and 16% year-to-date. However, fee income accounts for only 1% of that total, with the remaining 99% coming from the block subsidy of 3.125 BTC.

Hashprice, the dollar value a miner earns per petahash daily, has risen from $53.35 to $60.98 since mid-June, representing a 14% boost. This rebound puts hashprice near its highest level since March and offers strong margins to operators using efficient ASICs like Bitmain’s S21 or Canaan’s A1466.

Assuming power rates under $0.05/kWh, miners operating new-generation rigs see solid cash flow, even with fee income suppressed. Those with access to $0.03/kWh or lower are highly profitable, with payback periods below 12 months. This economic window is rare, especially post-halving, and it stems not from fee spikes or network volatility, but from external energy constraints reshaping competition.

Energy market constraints

China: Historic rainfall derails hydro supply

In southern China, rainfall in May, June, and July has broken multi-decade records, triggering floods across Guangxi, Guangdong, and Yunnan. These regions are central to China’s seasonal wet-season mining, where hydroelectricity typically drives operational costs below $0.03/kWh.

However, the volume and unpredictability of rain created grid instability and flood damage, disrupting the usual hash migration. According to the Chinese State Council and local media, natural disaster losses from floods exceeded $7.5 billion in the first half of 2025. While water was plentiful, the infrastructure to use it effectively was compromised.

As a result, Chinese off-grid capacity came online later and less consistently than expected. This tempered what is usually a significant Q2 hashrate surge from Asia, allowing North American and European capacity to hold a larger share of the global total for longer.

Texas: ERCOT faces the heat

In the US, ERCOT, the independent grid operator for most of Texas, entered July under extreme load. Forecasts suggested a peak demand of 87.5 GW, near record highs. Reports from S&P Global and local utilities projected sustained price spikes, especially on peak summer afternoons when air conditioning demand surges.

Publicly listed miners operating in Texas curtailed operations during these price events. Companies with demand-response agreements or spot-price exposure temporarily shut down rigs or sold power back to the grid, offsetting potential hashprice gains with grid-service revenue.

The combined impact of Chinese floods and Texas heatwaves is critical: the hashrate ceiling is no longer defined by hardware supply or market price, but by regional energy limits. Despite widespread ASIC deliveries in the second quarter, many new machines remain idle due to thermal or power constraints.

Transaction fees have declined throughout 2025. The average transaction fee fell from $2.38 in January to just $1.30 in mid-July, a 46% decrease. This plunge mirrors mempool activity: unconfirmed transactions dropped from over 116,000 to just 7,000 across the same span, a 94% reduction.

The cooling of inscription activity (notably Ordinals) and the general normalization of block space demand explain the fee drop. As a result, miner incentives have shifted heavily toward the subsidy. The fee share of revenue fell to just 1%, erasing most of the income variability that fueled miner exuberance in late 2023 and early 2024.

This matters because it disproves the dominant post-halving narrative. Instead of becoming increasingly fee-dependent, miners rely more on price and difficulty fluctuations than ever. Unless a new demand driver emerges for block space, revenue will stay subsidy-driven, tightening the margin gap between efficient and outdated fleets.

The base case for the remainder of 2025 sees moderate hashrate growth continuing. As Chinese hydro infrastructure stabilizes and summer in Texas ends, miners will likely deploy shelved machines and test new regions.

A bull scenario would require continued Bitcoin price appreciation and a resurgence in transaction fees. However, given the lack of retail participation in the market, these fees would most likely come from new inscriptions or synthetic token models. This would lift the hashprice above $70/PH/day and temporarily bring older machines back online.

The bear case hinges on grid instability. Prolonged ERCOT stress or a second hydro shortfall in Asia could hold back capacity while hashprice falls, forcing marginal operators offline. In this case, difficulty would drop further, triggering defensive consolidation among over-leveraged miners.

Difficulty projections remain bounded in a 122–129 T range short term. Given the current 10-minute average block time, protocol adjustments will likely remain small unless an exogenous shock occurs.

Bitcoin mining has entered a phase where the physical world matters more than ever. Record network hashrate and falling difficulty show the friction of weather, electricity markets, and infrastructure readiness.

In this environment, miners that optimize geography, power contracts, and cooling infrastructure stand to outperform. The price of Bitcoin remains an anchor, but it’s no longer the biggest factor influencing the industry. Real-world volatility, like the ERCOT pricing curve or rainfall in Yunnan, is now the decisive factor for Bitcoin mining.