Bitcoin Hashrate Down 15% From October Peak… “Prolonged Miner Capitulation”

Bitcoin (BTC) network hashrate has fallen about 15% from its peak in October last year, adding to signs that pressure on the mining industry is becoming protracted, according to an analysis.

According to CoinDesk, a cryptocurrency-focused media outlet, the average hashrate underpinning the Bitcoin network has declined from about 1.1 zettahashes per second (ZH/s) in October last year to roughly 977 exahashes per second (EH/s) recently. With electricity costs and reward pressure compounding, miners are seen to remain in a so-called “capitulation” phase. The deterioration in profitability is interpreted as prompting some miners to halt operations or sell Bitcoin.

The miner capitulation trend is also evident in the Hash Ribbon indicator. The indicator compares short- and long-term hashrate moving averages, and in late November last year the short-term line crossed below the long-term line. This is widely viewed as a signal typically observed when miners sell Bitcoin to raise operating funds.

Still, many in the market view miner capitulation as a contrarian signal over the medium to long term. Historically, after shakeouts in the mining industry, inefficient miners have exited, selling pressure has gradually been absorbed, and prices have subsequently recovered. Based on the Hash Ribbon, analysts say a renewed bullish crossover—when the 30-day moving average rises back above the 60-day line—could be read as a regime-shift signal.

Mining difficulty adjustments are also weighing on the sector. Bitcoin mining difficulty is expected to decline by an additional roughly 4% on the 22nd, and seven of the past eight adjustments have been downward. This suggests the drop in hashrate is being structurally reflected.

Adding to near-term supply-demand pressure is the fact that some mining companies are pivoting their strategies toward artificial intelligence (AI) and high-performance computing (HPC) businesses and selling Bitcoin.

The market is watching the possibility that while miners’ selling pressure may cap upside in the near term, supply-demand headwinds could ease over the medium to long term once the capitulation phase ends.