The Current State of Bitcoin Miners Facing Profitability Challenges 📉
Bitcoin miners are currently navigating a challenging phase known as “capitulation” as their profits dwindle amidst a sell-off in the Bitcoin market. Market intelligence firm CryptoQuant recently highlighted the metrics indicating miner capitulation, signaling a potential market bottom for Bitcoin. This phenomenon occurs when miners scale back their operations or sell a portion of their mined Bitcoin reserves to sustain their activities, generate yield, or hedge their Bitcoin exposure. Over the past month, CryptoQuant analysts have observed signs of capitulation coinciding with a 13% drop in Bitcoin’s price from $68,791 to $59,603.
The Decline in Bitcoin Hashrate 📉
One significant indicator of capitulation is the decline in Bitcoin’s hashrate, which represents the total computational power securing the Bitcoin network. The hashrate has experienced a notable 7.7% decrease, hitting a four-month low of 576 EH/s after reaching a record high on April 27. This decline resembles the post-FTX collapse conditions in December 2022, suggesting a potential market bottom. Notably, the decline in hashrate mirrors the drop witnessed in late 2022, preceding a substantial surge in Bitcoin’s price over the following months.
- The challenges faced by miners since the halving
- Miners have been underpaid post-halving, with daily revenues dropping by 63%.
- Total daily revenues have decreased from $79 million to $29 million, with transaction fees contributing only 3.2%.
- Miners have had to tap into reserves to earn additional yield, leading to increased daily outflows.
Bitcoin Price Plummets Amid Sell-Off 📉
The recent sell-off by miners, alongside selling pressure from Bitcoin whales and national governments, has contributed to Bitcoin’s price downturn. On July 5, Bitcoin dropped to a four-month low of $53,499, impacting miner profitability as measured by the “hash price.” Presently, the average mining revenue per hash stands at $0.049 per EH/s, slightly above the all-time low of $0.045 recorded previously. The total market capitalization of U.S.-listed Bitcoin miners hit an all-time high of $22.8 billion recently.
United States and Bitcoin Mining Stocks Surge 📈
Last month, Bitcoin mining stocks experienced significant gains following a pledge by U.S. presidential candidate Donald Trump to bolster mining activities in the country. Trump advocated for increased Bitcoin production within the U.S., highlighting the nation’s potential to become a dominant force in energy production. This announcement boosted investor sentiment and led to a surge in Bitcoin mining stocks.