Small Miners Exit as Bitcoin's Power Consolidates in Big Hands

Bitcoin miners are accelerating the liquidation of their holdings amid a sharp rise in mining difficulty, which has reached an all-time high. According to recent data, the Bitcoin mining difficulty increased to 136 trillion as of Sept. 6, 2025, marking the fifth consecutive rise since June. This surge reflects the growing competition among miners and the enhanced efficiency of mining hardware, reinforcing the Bitcoin network’s security and decentralization. However, the increasing difficulty has placed pressure on operational margins, particularly for small-scale miners lacking access to low-cost energy or advanced equipment.

The rising difficulty is accompanied by higher operational costs for electricity and cooling, while the revenue per terahash continues to decline. This trend is especially impactful for miners operating older or less efficient rigs, whose economic viability is deteriorating. As a result, many small miners have been forced to sell their Bitcoin holdings at an accelerated pace to cover expenses and maintain liquidity. In contrast, larger mining operations—often equipped with robust financing and hedging strategies—are better positioned to withstand the strain.

The increased mining difficulty coincides with a broader market trend of consolidation, as industrial-scale mining firms continue to dominate block production. Smaller players, unable to compete with the efficiency of large operations, face the prospect of being driven out of the market. This has led to a noticeable uptick in the liquidation of Bitcoin holdings by miners, further contributing to short-term market dynamics.

At the same time, Bitcoin’s illiquid supply—the portion of coins held by entities with little history of spending—has hit a record high of 14.3 million BTC, according to Glassnode. This represents approximately 72% of the total supply of 19.9 million BTC currently in circulation. The continued accumulation by long-term holders and cold storage investors underscores a strong conviction in Bitcoin as a long-term store of value. Notably, this growth in illiquid supply has occurred despite a 15% price correction from Bitcoin’s all-time high of $124,000 in mid-August. Over the past 30 days alone, the net change in illiquid supply has increased by 20,000 BTC, highlighting the resilience of investors during market volatility.

The divergence between Bitcoin’s hashrate and mining difficulty has also drawn attention from analysts. While the hashrate remains near record levels, the difficulty increases suggest a more concentrated mining landscape. This dynamic raises questions about the sustainability of mining profitability, particularly for smaller operators. The broader implications for market liquidity and price stability remain to be seen as the network continues to evolve.