Bitcoin’s BTC$68,657.39 mining difficulty dropped by around 11%, its largest decline since China’s 2021 crackdown on the industry, after a sharp decline in hashrate triggered by plunging prices and widespread winter storm-related outages in the U.S.

Mining difficulty, which determines how hard it is to find new Bitcoin blocks, adjusts roughly every two weeks to maintain a 10-minute block interval on the network.

The latest change brought the metric down from over 141.6 trillion to about 125.86 trillion, according to Blockchain.com data, signaling a steep drop in the number of active machines securing the network.

The decline follows a series of blows to miners. Bitcoin prices have fallen significantly from an all-time high of $126,000 in October to around $69,500.

That price drop forced many miners, especially those running outdated equipment and facing high energy costs, to shut down. Some also repurposed their hardware to focus on artificial intelligence (AI), as megacap firms offer stable contracts and often economically irresistible terms.

Bitfarms (BITF) notably saw its share price surge after saying it’s no longer a bitcoin company, and is instead focusing on data center development for high-performance computing and AI workloads.

Bitcoin mining revenue on a per terahash basis, measured via the hashprice, has plunged from nearly $70 at the time the cryptocurrency was trading at an all-time high, to now stand at little over $35.

Severe winter storms, particularly in Texas, compounded the situation. Grid operators issued curtailment requests to conserve electricity for residential users. Public mining firms scaled back production, with some seeing daily bitcoin output fall by more than 60%.

Although a drop in difficulty might appear alarming, it functions as a self-correcting mechanism. For miners who remain online, the reduced competition can increase profitability and help maintain the business model.

Historically, major difficulty drops have also signaled market capitulation, often preceding a stabilization or rebound in price as miners sell the BTC they mine to cover operational expenses.

Japan’s landslide election boosted equities but added near-term pressure to Bitcoin as capital rotated and liquidity tightened.

Japan’s ruling bloc secured a two-thirds majority in the Lower House on February 8, handing Prime Minister Sanae Takaichi a decisive victory that has already reshaped global market positioning.

The result has lifted Japanese equities while adding short-term pressure to Bitcoin (BTC), even as longer-term policy shifts in Tokyo may support institutional crypto adoption.

Takaichi’s Victory Reshapes Capital Flows

Market reaction to the election was swift, with Japanese stocks pushed to fresh record highs in the hours after the result, and the Nikkei extending gains as traders priced in aggressive fiscal stimulus and a more tolerant stance toward yen weakness.

Market watcher Ash Crypto wrote on X that Japan’s stock market had hit a new all-time high following Takaichi’s victory, reflecting optimism around domestic reflation.

Research firms and analysts were more cautious about global spillovers. XWIN Research described the outcome as bearish for Bitcoin in the near term, pointing to tighter global liquidity and shifting capital flows.

Meanwhile, GugaOnChain noted that the so-called “Takaichi Trade” is not a simple exit from U.S. assets but a portfolio rebalance. Japanese Government Bonds, sidelined for years by ultra-low yields, are attracting incremental capital as fiscal expansion raises reflation expectations.

That rotation has coincided with a pullback in U.S. equities. Over the past seven days, the Nasdaq Composite fell about 5.6%, the S&P 500 slipped by about 2.7%, and the Russell 2000 dropped close to 2.6%.

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A stronger dollar, driven by yen weakness and persistent rate gaps between the U.S. and Japan, has tightened financial conditions further. In these risk-off phases, Bitcoin has tended to move alongside U.S. equities, allowing equity-led de-risking to spill into crypto markets.

“The Takaichi Trade strengthens Japan but puts pressure on the U.S. and Bitcoin,” wrote GugaOnChain. “The capital flight to JGBs and a robust dollar create an environment of inevitable adjustments, requiring investors to closely monitor the correlation between U.S. indexes and crypto assets.”

Weak Sentiment Now, Policy Tailwinds Later

At the time of writing, BTC was trading just below $71,000, up about 2% on the day but down more than 6% over the past week and nearly 22% in the last month.

Adding to the feeling of fragility in the market, the Bitcoin Fear and Greed Index fell to a 6-year low on February 7 after BTC slid from above $90,000 in late January to near $60,000 before rebounding.

CryptoQuant’s latest report shows Bitcoin trading below its 365-day moving average, with spot and institutional demand weak and liquidity tightening, all common features of a bear phase.

Still, Japan’s political backdrop looks different beyond the immediate risk-off trade. With a two-thirds majority, Takaichi’s administration has room to pursue legislative changes, and officials have previously framed Web3 as an industrial policy focus. As such, analysts expect discussions around crypto tax reform and stablecoin rules to resume.

As XWIN concluded,

“Near-term pressure on U.S. equities and Bitcoin is macro-driven, while Japan’s institutional reforms may support crypto markets longer term.”

A Chinese-language crypto guarantee marketplace known as Xinbi processed nearly $18 billion in onchain transaction volume despite platform bans and United States enforcement actions aimed at dismantling similar services, according to a new report from TRM Labs.

The report said recent crackdowns — reshaped but failed to dismantle — a key layer in crypto-enabled laundering infrastructure. TRM’s analysis showed that Xinbi sustained on-chain activity after Telegram banned clusters of Chinese-language guarantee services in 2025. 

The report attributes Xinbi’s resilience to rapid migration to alternative messaging services and the launch of an affiliated wallet, XinbiPay. Onchain data showed wallet activity rebounded in January 2026 as users transitioned to the new setup.

The analytics firm said Xinbi has allegedly played a central role in allegedly laundering proceeds for scam operations and cybercrime syndicates, including pig-butchering fraud schemes.

The $17.9 billion figure reflects gross onchain transaction volume processed by wallets attributed to Xinbi by TRM. This includes inflows, outflows and internal transfers within the platform’s escrow and wallet system. 

TRM said the figure does not represent the net proceeds or confirmed illicit gains, and may include internal recycling of funds, which is common to guarantee services. 

Alleged illicit guarantee service Xinbi adapts to enforcement

In a statement sent to Cointelegraph, Ari Redbord, global head of policy at TRM Labs, said services like Xinbi are adapting.

“Guarantee services like Xinbi are learning to survive enforcement by fragmenting across platforms and building their own infrastructure,” Redbord said. 

“These services sit at the center of the scam economy,” he said, adding that taking them out of the laundering chain exposes entire networks that depend on them. 

TRM said Xinbi started promoting alternative channels for coordination as early as mid-2025, laying the groundwork for migration as enforcement pressure intensified. 

The analytics firm said the transition accelerated in January, coinciding with additional actions against peer services and arrests tied to laundering networks.

Related: Crypto thieves, scammers plunder $370M in January: CertiK

Xinbi previously flagged over $8 billion in stablecoin flows

Xinbi has been under scrutiny since 2025. In May, blockchain analytics firm Elliptic reported that wallets linked to Xinbi Guarantee had received at least $8.4 billion in stablecoins, tied to money laundering and scam-related activity in Southeast Asia. 

The earlier report linked Xinbi to a Chinese-language, Telegram-based marketplace selling money laundering services, stolen data, scam-enabling tools and other illicit offers. 

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