HomeCryptoFalling hashrate on Bitcoin (BTC): towards a capitulation of miners?

Falling hashrate on Bitcoin (BTC): towards a capitulation of miners?


Since the last Bitcoin halving, the situation of BTC miners has become increasingly precarious. Falling revenues, combined with falling BTC prices and rising energy costs, are putting a strain on them. Are we witnessing their capitulation?

Falling income for Bitcoin miners

The latest Bitcoin (BTC) halving, which reduced the block reward from 6.25 to 3.125 BTC, reportedly resulted in the shutdown of several mining machines.

According to a report published Wednesday by BTIG, this drop in mining activity is mainly due to the fall in miner revenues (equivalent to a price of around $30,000 for 1 BTC sold).

👉 Find out more – What is Bitcoin (BTC) halving and what are its effects?

Transaction fees, which rose to around $130 after the halving, have since stabilized to return to between $3 and $4. The price of Bitcoin, for its part, remained relatively stable after the halving, hovering around $63,000 on average.

Currently, the price of Bitcoin is hovering around $66,000, up 55% since the start of 2024.

Despite the stability of the BTC price, the overall hashrate decreased by about 6%, from an average of 624 EH in April to 585 EH in the first two weeks of May.

The drop in hashrate was expected and should be limited to 10% with the disconnection of the least efficient mining machines (such as those with an efficiency greater than 35 J/TH for example).

On the chart below, we can observe the evolution of the hashrate (computing power of the Bitcoin network) through its 30 and 60 day moving averages. Periods of sudden drop in hashrate, highlighted in green on the graph, often correspond to phases of “miner capitulation”.

Bitcoin chart showing signals of different miner capitulations

The situation could deteriorate further if the price of Bitcoin were to fall further. According to the BTIG report, most miners break even between $20,000 and $40,000 per Bitcoin.

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The impact of spot Bitcoin ETFs on the mining industry

Faced with this pressure on profitability, some mining farms are adopting different strategies.

Some, like Riot Platforms, Cleanspark and Cipher Mining, have reduced their Bitcoin sales, opting instead for fundraising to finance their operations. Others, like Core Scientific Inc and Bitdeer Technologies Group, continue to sell the majority of their Bitcoins to cover their operating costs.

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Grayscale (GBTC), BlackRock (IBIT) and Fidelity (FBTC), the 3 companies which hold approximately 85% of the assets under management on all spot Bitcoin ETFs, saw their number of shares outstanding increase by 38% between January and March.

At this time, the price of Bitcoin (BTC) marked a local high around $73,000.

Since then, the price of Bitcoin has fallen by about 14% but the number of outstanding shares of these ETFs has only increased by 1%. For the BTIG analyst, the Bitcoin halving could explain this phenomenon.

“If fund flows from ETFs seem to have supported the price of Bitcoin (BTC) at the start of the year, the halving was undoubtedly more decisive. »

The global hashrate could continue its downward trend throughout the summer, reaching its lowest point in August 2024. This drop could be due to the increase in energy prices in Texas, which are expected to reach $140/MWh during this period.

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Source : CryptoQuant

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