Bitcoin Miners Capitulating as Revenue Falls and Hashrate Drops: Is a Market Bottom Near?

• Bitcoin miners’ daily revenue dropped from $79M to $29M post-halving, leading to increased capitulation and reduced hashrate by 7.7%.
• Miners’ capitulation levels match those seen at the end of 2022, hinting at a market bottom similar to the post-FTX implosion period.
• Historical patterns show miner capitulation often aligns with significant market events, indicating possible recovery ahead.

Bitcoin miners are showing signs of capitulation, a phenomenon often linked to market bottoms. The world’s largest cryptocurrency has endured a 13% decline over the past 30 days, with data from CryptoQuant indicating a potential turnaround.

Miners Struggling Amid Market Drop

Bitcoin miners’ capitulation levels now mirror those seen at the end of 2022, following the FTX implosion, a period that marked a market bottom. CryptoQuant’s data highlights that current miner capitulation metrics are approaching these levels again.

Daily revenue for Bitcoin miners has plummeted to $29 million from $79 million following the latest Bitcoin halving earlier this year. This halving, which periodically reduces mining rewards, has also caused the hashrate to drop by 7.7%. Inefficient miners are turning off their equipment as they struggle with decreased profitability.

Source: CoinDesk

Price Trends and Support Levels

Bitcoin is below the $60,000 mark and currently trading at $58,227.16 after a 4.07% drop in the past 24 hours. This level has acted as critical support since April, with Bitcoin bouncing from this region three times before moving towards the $70,000 mark. CryptoQuant anticipates a similar rebound might occur soon, given the current signs of capitulation following intense sell pressure.

Historical Patterns and Correlations

Historical data shows a pattern where miner capitulation often coincides with significant market events or protocol changes like halvings. For instance, a major drawdown occurred in late 2022, likely due to the FTX collapse, affecting both Bitcoin’s price and the hashrate. The recent 7.7% drawdown in the network’s true hashrate after the halving suggests that many miners are struggling with profitability due to reduced block rewards not being offset by a proportional increase in Bitcoin’s price.

Implications for the Mining Industry

The ongoing stress in the Bitcoin mining industry suggests a potential shakeout of less efficient miners. However, historical patterns indicate that the network has repeatedly recovered from such drawdowns. The correlation between major price movements and hashrate drawdowns suggests that miner profitability remains closely tied to Bitcoin’s price.