Bitcoin’s hashrate has recently taken a downturn after enjoying an upward trend for the past 18 months, hinting at a possible capitulation among Bitcoin miners.
After steadily climbing for 18 months, Bitcoin’s true hashrate dropped to approximately 600 exahashes per second (EH/s). This measure is crucial in determining the level of difficulty miners face when mining Bitcoin (BTC).
The shift from the upward trend may indicate that some Bitcoin mining companies are offloading their BTC holdings, as per insights shared by Ki Young Ju, the founder and CEO of CryptoQuant. In a post dated June 13, Ju suggested that the decline in hashrate could be a sign of potential miner capitulation.
Despite the decline in Bitcoin’s hashrate, mining firms have not been actively selling large amounts of Bitcoin on exchanges. According to CryptoQuant data, the flow of Bitcoin from miners to cryptocurrency exchanges dropped from a monthly peak of 15,470 BTC on May 21 to just 7,239 BTC on June 13.
The fall in Bitcoin’s price does not appear to be directly linked to miner capitulation. While BTC’s price dropped from over $71,100 on June 5 to the current $66,800, daily flows of Bitcoin from miners to exchanges continued to decrease steadily.
The reduction in Bitcoin’s true hashrate might also be attributed to mining companies shutting down older ASIC chip mining rigs that have become unprofitable since the fourth Bitcoin halving. Data from Blockchain.com shows that Bitcoin’s total hashrate reached 586,377 TH/s on June 12.
An April 19 report from CoinShares had predicted this temporary drop in hashrate, anticipating a surge in hash rate by 2025. The report mentioned that the increase in Bitcoin mining costs post-halving and rising electricity prices could be contributing factors to the decline.
The profitability of mining operations largely hinges on the electricity costs incurred by the companies. Older ASIC models like the S19 XP and M50S++ operate at a loss when electricity costs exceed $0.0 per kilowatt-hour, as highlighted in a post on Hashrate Index on May 2.
In summary, the recent downturn in Bitcoin’s hashrate may be signaling a shift in the mining landscape, with potential miner capitulation and the phasing out of unprofitable mining rigs playing key roles in the current scenario.