When hashrate compression persists over extended periods, positive forward returns tend to occur more frequently and with greater magnitude.
Bitcoin News
Bitcoin's hashrate declined 4% over the month ending Dec. 15, which VanEck analysts view as a historically bullish contrarian signal. When hashrate compression persists over extended periods, positive forward returns tend to occur more frequently and with greater magnitude.
VanEck’s crypto research lead Matt Sigel and senior investment analyst Patrick Bush noted that since 2014, Bitcoin 90-day forward returns have been positive 65% of the time when network hashrate declined over the prior 30 days. This compares to 54% positive returns when hashrate increased during the same period.
The pattern strengthens when examining longer timeframes. Negative 90-day hashrate growth has been followed by positive 180-day Bitcoin returns 77% of the time, with an average gain of 72%. This outperforms the 61% positive return rate observed when hashrate increased over comparable periods.
The trend offers optimism for Bitcoin miners, as rising prices could widen profitability margins or bring previously unprofitable operations back online. Bitcoin currently trades at $87,400, down nearly 30% from its Oct. 6 all-time high of $126,080.
Sigel and Bush highlighted that break-even electricity prices on a 2022-era Bitmain S19 XP miner have fallen nearly 36%. The cost dropped from $0.12 per kilowatt-hour in December 2024 to $0.077 per kilowatt-hour as of mid-December, demonstrating how challenging conditions have become for mining operations.
The 4% hashrate decline represents the sharpest drop since April 2024. VanEck analysts attributed the fall largely to the recent shutdown of approximately 1.3 gigawatts of mining capacity in China. Much of that power could shift to accommodate rising artificial intelligence demand, potentially erasing 10% of the Bitcoin hashrate.
Not all nations are retreating from Bitcoin mining activities. Sigel and Bush estimate up to 13 countries now support mining operations, signaling continued government-level interest in the industry.
Russia, France, Bhutan, Iran, El Salvador, the UAE, Oman, Ethiopia, Argentina, Kenya and Japan are among nations backing companies to mine Bitcoin. The diverse geographic spread suggests mining infrastructure continues to expand despite price pressures and energy competition from emerging AI data centers.
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