Bitcoin has experienced a 4% decline in hashrate over the last month, a trend that analysts from VanEck suggest may lead to a positive shift in the cryptocurrency’s price. Historically, miner capitulation, defined as a sustainable drop in hashrate, has been seen as a bullish indicator.
“When hash rate compression persists over longer periods, positive forward returns tend to occur more often and with greater magnitude,” commented Matt Sigel and Patrick Bush in their report.
They highlighted that since 2014, Bitcoin’s returns in the following 90 days have been positive 65% of the time when there was a drop in hashrate, contrasting with only 54% when the hashrate increased.
Currently, Bitcoin is trading at $88,400, down nearly 30% from its all-time high of $126,080 on October 6.
Breakeven Prices for Miners Have Dropped Over 35%
The analysts pointed out that the breakeven price of electricity for a typical Bitmain S19 XP miner has decreased from $0.12 to $0.077 per kWh since December 2024. This reflects the harsh environment miners are operating in.
Change in breakeven price on an S19 XP miner since January 2020. Source: VanEck
Recent reductions in hashrate were reportedly influenced by the shutdown of mining capacities in China, which has seen a substantial 1.3 gigawatts removed from operations.
Moreover, analysts claim that many countries remain in favor of mining activities, with nations like Russia, France, and Japan actively supporting them. This suggests a potential shift in the landscape of Bitcoin mining.
Related Article: Sell Bitcoin for gold? Not so fast, one analyst says
