According to recent data from CryptoQuant, the Bitcoin mining industry is showing signs of "capitulation."
According to recent data from CryptoQuant, the Bitcoin mining industry is showing signs of "capitulation," a potential indicator that Bitcoin might be nearing a local price bottom before possibly surging to new highs. The market intelligence platform's Wednesday report analyzed metrics related to miners, who secure the Bitcoin network in exchange for newly issued BTC.
One significant sign of capitulation is a notable decline in Bitcoin's hash rate, which represents the total computational power securing the network. After reaching a record high of 623 exahashes per second (EH/s) on April 27, the hash rate has since fallen 7.7% to 576 EH/s, the lowest it has been in four months.
Historically, such a drawdown in hash rate has been linked to conditions where Bitcoin's price bottoms out. For instance, a similar 7.7% hash rate decline occurred in December 2022, when Bitcoin's price hit $16,000 before increasing by over 300% in the following 15 months.
This recent decline in hash rate follows Bitcoin's fourth cyclical "halving" event in April, which reduced the number of coins paid out to miners by half. According to CryptoQuant's miner profit/loss sustainability indicator, this halving has left many miners "extremely underpaid" since April 20, leading them to shut down unprofitable mining machines. As a result, daily mining revenues have plummeted by 63% since the halving, when both Bitcoin's base block rewards and transaction fee revenues were significantly higher.
Amid these financial pressures, Bitcoin miners have been moving coins out of their on-chain wallets at an accelerated pace, suggesting they may be selling their BTC reserves. CryptoQuant noted that daily miner outflows have spiked to the highest volume since May 21.
This sell-off by miners, along with sales from Bitcoin whales and national governments, has contributed to Bitcoin's recent price pullback in June. The decline has also impacted Bitcoin's "hash price," a measure of miner profitability per unit of computational power. Currently, the average mining revenue by hash stands at $0.049 per EH/s, just above the all-time low of $0.045 reached on May 1.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators.
This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice.
The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
