Happy Friday!
Bitcoin rallied sharply last weekend following one of its worst daily drawdowns ever, leading many (including us) to ask, “are we so back, or is it still very much so over?” And more importantly, “what the hell happened?”
We grope for answers to those questions in today’s newsletter, plus:
Bitdeer faces a legal hurdle for its Clarington, Ohio data center
MARA’s attempt to take a controlling stake in France’s national data center arm takes another turn
2025 year-end / Q4 earnings are trickling in
New podcasts, chart of the week, and other miscellany
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What really happened on 10/10 and 2/5?
In the wake of Bitcoin’s spectacular cascade to $60,000 last week, the Crypto Fear and Greed Index printed a 5. That’s lower than the Terra Luna collapse, lower than the FTX crash, and lower than the 2022 market bottom.
The drawdown liquidated over $2.5 billion in positions in a single day. On-chain data indicates that this was the single largest realized loss event in Bitcoin's entire history.
And YET none of the indicators saw this coming.
Naturally, this raises a few questions, but principal among them: did we just witness a complete collapse of crypto market structure?
Something definitely seems to have “broken,” and we might be able to trace it back to the beginning of the current bear market on October 10, 2025.
Two bitcoin crashes, (maybe) one story
Let’s start with the supposed beginning of the current drawdown, October 10, 2025 (now known as “10/10” in crypto circles), and whether or not something broke in bitcoin’s market structure.
Bitcoin’s crash on October 10 wiped out $19 billion in a matter of hours, as bitcoin dropped 12.5% from its $125,000 all time high. Was this natural market phenomena or is someone specific to blame?
Binance has become a scapegoat for this crash, so much so that Binance co-CEO Richard Teng was defending the exchange at Consensus Hong Kong just today.
Depending on who you ask, there is enough smoke here for people to yell fire. OKX's CEO said Binance's USDe yield campaign created a leverage bomb, and on-chain sleuths found a mystery account that opened $1.1 billion in bitcoin shorts on Hyperliquid right before impact.
Not everyone is convinced of these framings, though.
Wintermute's CEO, for example, said it was just a flash crash on a Friday night with thin trading volume. Binance takes this line as well, and it has set aside a $328 million fund to compensate to its users for incidents on its platform related to USDe index deviation and internal “asset matching degradation” during the crash.
TL;DR: nobody agrees on what happened on 10/10.
Now, flashback to February 5, and the trouble deepens. Bitcoin dropped from $76K to $60K in a harrowing 24 hour period.
The most compelling theory for what’s ailing bitcoin connects the two crashes directly: Hong Kong hedge funds running leveraged IBIT options with yen-borrowed capital got wrecked on 10/10, doubled down, piled into silver – which also blew up – and then the final BTC push finished them off.
Because they traded ETFs (and not spot crypto),this washout didn’t pop up on the crypto world’s radar until it was over. Meanwhile, stablecoins lost $14 billion from December through February and the cash-and-carry yield (Bitcoin basis trade) collapsed from 17% yields to under 5%.
This is the telltale sign that capital wasn’t rotating – it was exiting crypto altogether.
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Blockspace Headlines
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Bitdeer faces lawsuit over Clarington data center plans
Bitdeer is being sued over its plans to build an HPC data center in Clarington, Ohio, as a neighboring tenant on the property alleges that the plans violate its contractual rights to the leased space. - link
French officials tap billionaire Xavier Niel to ease concerns over stalled MARA deal: The Big Whale
French officials have reportedly tapped telecommunications billionaire Xavier Niel to acquire a stake in the Électricité de France (EDF) subsidiary, Exaion, in an attempt to mollify sovereignty concerns over U.S. bitcoin miner MARA (NASDAQ: MARA) taking a controlling stake in the company. - link
Synteq Digital acquires HMTech to expand into GPU services
Bitcoin mining services provider Synteq Digital has acquired ASIC miner repair shop HMTech. The acquisition includes HMTech’s operating business, repair facilities, and two data centers in Texas with a total potential capacity of 30 MW. Synteq paid for the bulk of the acquisition in equity. - link
NFN8 Group files for Chapter 11 bankruptcy
Bitcoin miner NFN8 Group filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Western District of Texas on February 2, according to court documents. The company cited a catastrophic fire at its Crystal City, Texas, facility as the primary catalyst for the restructuring. - link
Enduring Wealth Capital closes $10.5M Cango investment, achieves 49.71% voting power
Bitcoin miner Cango closed a $10.5 million round and secured an additional $65 million in equity commitments on Thursday. The Bitcoin miner will use the capital to fund its expansion into AI/HPC and strengthen its balance sheet. - link
Chart of the Week
For the first time since 2011, Bitcoin has experienced six downward difficulty adjustments in the span of three months. And it was nearly seven in a row, but a measly 0.04% positive adjustment on Christmas Eve had to go and ruin it for everyone.
Blockspace Podcasts
On the latest Blockspace Podcast, Tom Masiero, Head of Strategy at Cathedra joins us to talk about the structural shifts pushing bitcoin miners toward AI and HPC services. We explore why this migration mirrors the 2021 China mining ban, the hidden opportunities for smaller operators, and why Bitcoiners understand the "power game" better than traditional data centers. Tom breaks down the reality of infrastructure costs, the current state of hash price, and how the "cockroach" mentality of miners is paving the way for the future of global compute.
For this week’s Tuesday show, veteran Bitcoin journalist Kyle Torpey joins us to talk about the explosive revelations for Bitcoin in the latest Epstein files. We explore Epstein's $3M stake in Coinbase and his intriguing meetings with the architect of the Bitlicense, Ben Lawsky. Kyle debunks conspiracy theories about Epstein hijacking Bitcoin Core and explains the real influence Epstein had on early startups and protocol development. We also touch on the Blocksize Wars, SegWit2x, and other surprising Bitcoin connections hidden in DOJ documents.
The best piece of advice/wisdom I ever received came from my late paternal grandmother, and I’ve been thinking about it a lot recently with regard to the topic of today’s newsletter and the bombshell revelations in the latest Epstein Files: “There are three sides to every story: what one side said, what the other side said, and what really happened.” RIP Sue Sue — you were a real one.
-CBS + CMH
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Header image on web by Georg Pahl via Creative Commons.