Bitcoin’s hashrate has broken down from an 18-month uptrend, suggesting the start of a potential Bitcoin miner capitulation.
Following an 18-month uptrend, Bitcoin’s true hashrate fell to around 600 exahashes per second (EH/s). The hashrate is used to measure how difficult it is for miners to mine Bitcoin (BTC).
The breakdown from the uptrend could signal that some Bitcoin mining firms are selling their BTC, according to Ki Young Ju, the founder and CEO of CryptoQuant. He wrote in a June 13 X post:
“Bitcoin hash rate’s 18-month upward trend has broken, suggesting some miners are capitulating.”
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Is miner selling really what tanked Bitcoin to $66,000?
Despite the drop in Bitcoin’s hashrate, mining firms haven’t been selling significant amounts of Bitcoin.
Bitcoin miner flows to cryptocurrency exchanges fell from a monthly peak of 15,470 BTC on May 21 to just 7,239 BTC on June 13, according to CryptoQuant.
However, Bitcoin’s price drop doesn’t seem to be caused by miner capitulation. BTC price fell from over $71,100 on June 5, to the current $66,800, while daily miner flows to exchanges continued to steadily decline.
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Bitcoin miner capitulation or old ASIC miners shutting down?
The decline in Bitcoin’s true hashrate could also be attributed to mining firms turning off older generation ASIC chip mining rigs, which have become unprofitable since the fourth Bitcoin halving.
Meanwhile, Bitcoin’s total hashrate fell to 586,377 TH/s on June 12, according to data from Blockchain.com.
The temporary drop was predicted by an April 19 report by CoinShares, which expects the hash rate to surge in 2025. According to the report:
“Our model forecasts the hash rate rising to 700 exahash by 2025, although after the halving, it could fall by up to 10% as miners turn off unprofitable ASICs.”
The temporary reduction is attributed to the increased costs of Bitcoin mining due to the halving, along with rising electricity costs.
However, the profitability of mining operations largely depends on the cost of electricity the companies are paying. The S19 XP and M50S++, two of the older ASIC models, operate at a loss with electricity costs above $0.0 per kilowatt-hour, according to a May 2 X post by Hashrate Index.
“S19 XP & M50S++ will operate at a loss if the hash cost rises >$0.09/kWh. >$0.08/kWh k Pros & M50S+ will be unprofitable. And at $0.06-$0.07/kWh the S19j Pro+, j Pros, and M30S++ will struggle.”