Bitcoin mining stress deepened as difficulty fell 14% and Puell dipped below 0.8, even as Cango sold $305M in BTC.

Bitcoin mining conditions tightened sharply in late January and early February after network difficulty fell 14% over three weeks and publicly traded miner Cango disclosed a $305 million BTC sale over the weekend.

The combination of falling profitability metrics and selective balance sheet sales shows pressure spreading across the mining sector, even as broader on-chain data shows no signs of disorderly selling.

Difficulty Drops as Miners Cut Capacity

According to a February 10 brief published by on-chain analyst Axel Adler Jr., Bitcoin’s network difficulty dropped by a combined 14.1% between January 22 and February 6, following two consecutive downward adjustments of 3.3% and 11.2%. Such back-to-back cuts usually occur when less efficient mining equipment is taken offline, often during periods of weak price action.

During the same window, the price of BTC fell about 25%, briefly touching $60,000 before rebounding toward $70,000. At the time of writing, the flagship cryptocurrency was trading at around $69,000, down nearly 1% in the last 24 hours and more than 12% over the past week, based on CoinGecko data.

The asset has also lost 24% of its value over the past month and about 29% year over year, underperforming earlier-cycle expectations and keeping mining margins tight.

Against this backdrop, Cango confirmed it sold 4,451 BTC for approximately $305 million, citing balance sheet strengthening. The sale, approved by the company’s board, drew an immediate reaction from equity investors, with Cango shares closing 8% lower on the first trading day after the disclosure.

Adler described the transaction as a point event rather than evidence of widespread forced liquidation, noting that aggregate miner flows to exchanges are still holding steady.

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Data from miner exchange inflows supports that view, with the 30-day moving average of daily miner transfers hovering near 82 BTC, only slightly lower than mid-January levels and well within recent norms, according to the market watcher. Furthermore, he reported that there have been no sustained spikes that would suggest broad reserve dumping.

Profitability Pressure and What Comes Next

Profitability metrics still point to strain. For instance, Adler pointed out in his brief that the Puell Multiple, which compares daily miner revenue to its annual average, slipped to a 30-day average of 0.77 in early February, down from 0.86 in mid-January. He added that spot readings briefly fell to around 0.61, levels historically associated with miner stress and capacity exits.

The analyst noted that miners earning below their annual average tend to prioritize liquidity, increasing the chance of selective reserve sales rather than aggressive expansion. According to him, completion of this stress phase typically requires a reversal in difficulty adjustments and a recovery in the Puell Multiple toward the 0.85 to 0.90 range.

For now, the data suggests the adjustment is playing out mainly through hashrate reductions instead of heavy selling. The risk, in Adler’s opinion, is a renewed price drop below $60,000, which could push profitability metrics lower and prompt similar sales from other public miners.

Crypto miner and manufacturer Canaan fell 6.9% on the Nasdaq on Tuesday despite reporting a 121.1% year-on-year increase in revenue to $196.3 million in the fourth quarter, driven by an increase in hardware sales and stronger mining performance.

Canaan reported that its Bitcoin (BTC) mining revenue rose 98.5% year-on-year to $30.4 million, helping boost its Bitcoin treasury to a record 1,750 BTC, valued at nearly $120 million, while the company also increased its Ether (ETH) holdings to 3,950 ETH, worth $7.9 million.

The revenue figure is Canaan’s highest quarterly posting in three years, and was also driven by Bitcoin mining machine sales, with the company shipping a record 14.6 exahashes per second (EH/s) of computing power during the quarter.

Canaan said computing power sales were supported by a “milestone order” from a US-based institutional miner, helping it set a new quarterly record for computing power sales and achieve a 60% year-on-year increase.

On the mining front, the Singapore-based company said it expanded its installed hashrate to 9.91 EH/s, with 7.65 EH/s operational during the quarter.

Bitcoin network hashrate has fallen from a record 1,150 EH/s in mid-October to 980 EH/s as miners continue to unplug unprofitable machines and pivot to AI and high-performance computing.

Despite the strong Q4 performance, Canaan (CAN) shares tanked another 6.87% to $0.56, Google Finance data shows, making it one of the lowest performers among the 15 largest Bitcoin miners by market cap.

Canaan’s risk of Nasdaq delisting worsens

At its current price of $0.56, the company is now down 18.1% year-to-date and 70.2% over the last 12 months.