Recent Bitcoin Miner Capitulation May Indicate a Market Bottom: Insights from VanEck

A recent report from VanEck suggests that the decline in Bitcoin's hashrate might signal an upcoming market bottom. This phenomenon, known as miner capitulation, has historically been associated with price increases in Bitcoin. Despite a significant dip in Bitcoin's value, trends in mining conditions could create favorable environments for profitability among miners in the near future.

Key Takeaways

Bitcoin hashrate fell by 4% as of December 15.
Miner capitulation could indicate potential price rises for Bitcoin.
Historical data shows that declining hashrate often leads to positive future returns.
The breakeven electricity price for Bitcoin miners has decreased significantly.
Some countries continue to support Bitcoin mining operations.

Recent Bitcoin miner capitulation may signal bottom is near: VanEck

Bitcoin Hashrate Decline and Market Implications

Bitcoin's hashrate dropped 4% by December 15, a trend that analysts at VanEck view as potentially positive for the cryptocurrency's price in the upcoming months. According to Matt Sigel and Patrick Bush from VanEck, miner capitulation is considered a historically bullish contrarian signal. They emphasized that sustained hashrate compression can lead to positive returns more frequently and to a greater extent.

From 2014 onward, Bitcoin's 90-day forward returns have been positive 65% of the time when the network's hashrate decreased over the past 30 days. In contrast, positive returns occurred only 54% of the time with an increasing hashrate.

This optimistic pattern also extends to a longer time frame—negative hashrate growth over 90 days generally precedes positive returns over the following 180 days, with success rates at 77% and an average gain of 72%. This trend may encourage Bitcoin miners, as rising prices could improve profitability margins or enable previously unprofitable miners to resume operations.

Currently, Bitcoin is trading at $88,400, representing a nearly 30% decrease from its all-time high of $126,080 reached on October 6, according to CoinGecko data.

Change in breakeven price on an S19 XP miner since January 2020. Source: VanEck

Breakeven Prices for Bitcoin Miners Decline Over 35%

Sigel and Bush also highlighted that the breakeven electricity price for a 2022-era Bitmain S19 XP miner—a commonly used mining rig—has dropped almost 36%. It fell from $0.12 per kilowatt-hour (kWh) in December 2024 to $0.077/kWh by mid-December, illustrating the challenging market conditions faced by miners.

The analysts noted that the 4% decline in Bitcoin's hashrate, the steepest since April 2024, resulted from the shutdown of approximately 1.3 gigawatts of mining capacity in China. They speculated that this power might be redirected to meet growing AI demand, which could potentially eliminate 10% of the Bitcoin hashrate.

Global Support for Bitcoin Mining

Despite some nations scaling back their Bitcoin mining activities, Sigel and Bush reported that around 13 countries are actively supporting Bitcoin mining. These nations include Russia, France, Bhutan, Iran, El Salvador, the UAE, Oman, Ethiopia, Argentina, Kenya, and, more recently, Japan.

Source: Cointelegraph

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