Bitcoin's hashrate fell 4% in the month to December 15, but analysts at VanEck said this could be a positive sign for crypto prices in the coming months, as miners' capitulation is a “historically bullish contrarian signal.”
“When hashrate compression continues over an extended period of time, positive forward returns tend to occur more frequently and to a greater magnitude,” VanEck crypto research leader Matt Siegel and senior investment analyst Patrick Busch said in a report on Monday.
They pointed out that since 2014, Bitcoin's 90-day forward return has been positive 65% of the time when the network's hashrate was declining in the past 30 days, compared to 54% when the hashrate was rising.
This pattern also holds true when looking further ahead, with 90 days of negative hashrate growth followed by a positive 180-day Bitcoin return 77% of the time, with an average return of 72%, outpacing the 61% positive return when the hashrate increases over the same period.
This trend is optimistic for Bitcoin (BTC) miners, as rising prices could expand profit margins for some miners or bring previously unprofitable miners back online.
Bitcoin is currently trading at $88,400, down nearly 30% from its all-time high of $126,080 on October 6, according to data from CoinGecko.
Break-even price for Bitcoin miners is over 35%
Siegel and Busch noted that the break-even electricity price for the 2022 Bitmain S19 XP miner, one of the most popular Bitcoin mining rigs, has fallen nearly 36% from $0.12 per kilowatt hour (kWh) in December 2024 to $0.077/kWh as of mid-December, highlighting how difficult the situation is for miners.
S19 XP miner break-even price change since January 2020. source: Van Eck
Analysts at VanEck said the significant 4% decline in Bitcoin hashrate since April 2024 is likely due to the recent shutdown of approximately 1.3 gigawatts of mining capacity in China.
The pair said much of that power could shift to meet the growing demand for AI, a trend they estimate could wipe out 10% of Bitcoin's hashrate.
Nation-states still support companies mining Bitcoin
Not all countries are withdrawing from the Bitcoin mining industry, with Siegel and Bush estimating that up to 13 countries currently support Bitcoin mining activities.
These include Russia, France, Bhutan, Iran, El Salvador, UAE, Oman, Ethiopia, Argentina, Kenya, and most recently Japan.
sauce: cointelegraph
