Bitcoin Hash Rate Sees 4% Decline Amid Miner Challenges: Implications for Prices

Bitcoin (BTC)'s network hash rate has experienced a significant 4% drop over the past month, reflecting the steepest decline in almost two years. As prices fluctuate and decline, miners are feeling the pressure, impacting their profitability. An investment management firm, VanEck, suggests that this miner capitulation could potentially signal a market bottom.

Key Takeaways:

Bitcoin's hash rate has dropped by 4%, marking a significant decline amid miner profitability issues.
The decline in hashing power is linked to both Bitcoin's price instability and machine shutdowns in China.
Historical data suggests that a declining hash rate could signal potential future gains for Bitcoin.
Technical indicators point to patterns that may suggest a market bottom is forming, though future price movements remain uncertain.

Bitcoin Mining Power Declines Due to Price Weakness and Chinese Shutdowns

According to VanEck’s mid-December 2025 Bitcoin ChainCheck report, the 4% decrease in the network’s hashing power is the largest since April 2024. This decline coincides with a tough month for Bitcoin, during which its price has fallen about 9%. Moreover, market volatility has surged, pushing the 30-day realized volatility above 45%, the highest level recorded since April 2025.

Matthew Sigel and Patrick Bush from VanEck observed, “We typically expect the rate to drop during significant pullbacks in Bitcoin’s price.”

In addition to pricing pressures, the hash rate has also felt the effects of recent developments in China. Reports indicate that approximately 400,000 mining machines were taken offline in Xinjiang province. This shutdown resulted in the loss of approximately 1.3 GW of capacity and severely impacted the overall network. Chinese computing power diminished by roughly 100 exahashes per second within just 24 hours. Analysts noted, “This is likely due to a shift in power generation towards AI demand and may lead to the removal of up to 10% of Bitcoin network hashing power.”

Compounding these issues, miner profitability has also declined significantly due to the fluctuations in Bitcoin’s price. VanEck points out that the breakeven electricity cost for a Bitmain S19 XP miner from 2022 fell from $0.12 in December 2024 to $0.077 by mid-December 2025, reflecting a 36% decrease. Sigel and Bush mentioned, “While miner profitability has been low lately, many continue to operate despite negative economics because of their belief in Bitcoin’s future. To maintain the long-term hash rate of the Bitcoin network, we estimate that as many as 13 nations are mining with the backing of their central governments.”

Historical Trends Indicate Potential Bullish Turn

Despite current challenges, VanEck suggests that the decrease in hash rate could be perceived as a “bullish contrarian signal.” Analysis of data dating back to 2014 reveals that Bitcoin’s future returns often perform better during periods when the network hash rate is declining.

Approximately 65% of the time, the 90-day forward BTC returns were positive when the hash rate had fallen over the prior month, compared to 54% during times of increasing hash rate. Furthermore, average returns over 180 days were slightly higher following a hash rate decline, averaging around 20.5%, versus 20.2% when the hash rate was on the rise. This pattern also holds true for longer time periods.

The analysts revealed, “Out of the 346 days since 2014 when the hash rate grew negatively over 90 days, 180-day forward BTC returns were positive (77%) of the time, averaging a return of (+72%). In comparison, outside of these days, the 180-day forward BTC returns were positive (~61%) of the time, with an average return of (+48%).”

Technical Indicators Support Bottom Formation

Market analysts are also observing potential signs of a market bottom from a technical perspective. Analysts like Ted Pillows have noted a 3-day bullish divergence for Bitcoin, a pattern that has previously indicated market bottoms during its last two occurrences. Pillows stated, “The BTC 3D bullish divergence has now been confirmed. In the last two instances, Bitcoin formed a bottom.”

The 3-day bullish divergence appears to be firmly established.

For now, whether Bitcoin will experience another upward movement remains uncertain. Currently, the leading cryptocurrency trades at $88,066, reflecting a 1.01% decline over the past 24 hours.