Bitcoin mining has a built-in thermostat. Roughly every two weeks, the network checks how quickly new blocks are being found and resets a number called difficulty, which sets how much computing work it takes to earn the next reward. When more machines join the race, difficulty climbs, and every existing miner ends up with a smaller slice of the same fixed reward. The payout per block does not change when difficulty rises, so the only way to hold output steady is to keep adding machines.
October brought two sharp turns of that thermostat. Difficulty started the month at about 132.76 trillion, rose 5.92% on October 16th, and climbed another 5.54% on October 29th to finish at 148.36 trillion. Taken together, that is an increase of about 11.8% in a single month. Network computing power also pushed back above 1,000 exahashes per second (EH/s) for the first time since early June, a sign that a lot of new equipment had been switched on.
Miners track a figure called hashprice, which estimates what one unit of computing power earns per day. After the October 29th adjustment, it sat near $34 per petahash per day, compared with about $46 at the peak a year earlier. Bitcoin itself traded around $75,500 this morning, down more than 5% from a day earlier, and the slide set off roughly $1.25 billion in liquidations of leveraged crypto positions. Higher difficulty and a lower price squeeze the same margin from two directions.Â
Monthly production reports are often where that squeeze shows up first, and the latest one from BitFuFu Inc. (NASDAQ: FUFU) makes it easy to see. The Singapore-based company runs its own mining machines and also sells computing power to customers through a cloud-mining platform. It produced 137 bitcoin in October, down from 167 in September, a decline of about 18%. Daily output averaged 4.4 bitcoin, compared with 5.6 the month before.
The split between the two businesses matters. Cloud-mining production was essentially flat, edging up from 69 to 70 bitcoin. Self-mining, where the company keeps the rewards from its own fleet, fell from 98 to 67 bitcoin, a drop of about 32%. BitFuFu pointed mainly to rising difficulty, but that is only part of the story. On its own, an 11.8% rise in difficulty would trim a steady fleet’s output by roughly a tenth, and by less here because the increases landed in the middle and at the end of the month. Self-owned hashrate also slipped from 3.8 to 3.7 EH/s, but that small dip does not close the gap either, and the release does not explain the rest of the decline.Â
Other operating figures were steadier. Total hashrate under management was 19.5 EH/s, against 19.4 EH/s in September. Average fleet efficiency improved to 16.3 joules per terahash from 16.7, meaning less electricity for the same work. Power capacity under management fell to 317 megawatts from 324, and the release did not explain why.Â
The more notable move was on the balance sheet. Even as self-mined output fell, BitFuFu’s bitcoin holdings rose 4.8% to 1,454 coins from 1,388, an addition of 66 bitcoin. At this morning’s price of about $75,500, the full stack is worth roughly $110 million. Chairman and CEO Leo Lu said the growth reflected the company’s continued accumulation strategy, even as difficulty weighed on production. The release does not say how much of the gain came from retained production and how much from market purchases, and all of the figures are unaudited.Â
Holding mined coins instead of selling them is a bet that bitcoin will be worth more later, but it adds price risk just as each new coin costs more to produce. A falling price lowers the value of the treasury and the revenue from fresh output at the same time, which is why these monthly updates often serve as an early read on a miner’s quarterly results.
The next difficulty adjustment is expected around November 16th. If network computing power keeps climbing while the bitcoin price stays near current levels, November’s report will show whether BitFuFu can keep growing its holdings while its own machines earn less per hour.
