Bitcoin’s hashrate fell 4% over the month to Dec. 15, which could be a positive sign for the cryptocurrency’s price in the months ahead as miner capitulation is “historically a bullish contrarian signal,” VanEck analysts say.
“When hash rate compression persists over longer periods, positive forward returns tend to occur more often and with greater magnitude,” VanEck crypto research lead Matt Sigel and senior investment analyst Patrick Bush noted in a report on Monday.
They noted that since 2014, Bitcoin’s 90-day forward returns have been positive 65% of the time when the network’s hashrate had declined over the prior 30 days, compared with 54% when the hashrate rose.
The pattern holds even when looking further ahead, with negative 90-day hashrate growth followed by positive 180-day Bitcoin returns 77% of the time and an average gain of 72%, outperforming the 61% positive returns when hashrate increased over the same period.
The trend is optimistic for Bitcoin (BTC) miners, as rising prices could widen profitability margins for some or result in turning previously unprofitable miners back online.
Bitcoin is currently trading at $88,400, down nearly 30% from its Oct. 6 all-time high of $126,080, CoinGecko data shows.
Bitcoin miner breakeven prices tank over 35%
Sigel and Bush pointed out that the breakeven electricity price on a 2022-era 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 tough conditions have become for miners.
The VanEck analysts said the 4% fall in Bitcoin hashrate, the sharpest since April 2024, was likely driven by the recent shutdown of roughly 1.3 gigawatts of mining capacity in China.
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The pair said much of that power could shift to accommodate rising AI demand, a trend the duo estimated could erase 10% of the Bitcoin hashrate.
Nation-states are still backing companies to mine Bitcoin
Not all nations are moving away from the Bitcoin mining industry, with Sigel and Bush estimating that up to 13 countries are now supporting Bitcoin mining activities.
Among them are Russia, France, Bhutan, Iran, El Salvador, the UAE, Oman, Ethiopia, Argentina, Kenya, and, more recently, Japan.
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