Bitcoin’s hashrate has fallen from an 18-month uptrend, reaching around 600 exahashes per second (EH/s). The hashrate measures the difficulty of mining Bitcoin, and the recent breakdown could indicate that some mining firms are selling their Bitcoin (BTC), according to Ki Young Ju, CEO of CryptoQuant. He commented in a June 13 X post, “Bitcoin hash rate’s 18-month upward trend has broken”, raising concerns of potential miner capitulation.
Miner Activity and Bitcoin Price
Despite the drop in hashrate, mining firms have not been offloading significant amounts of Bitcoin. Bitcoin miner flows to exchanges fell from a monthly peak of 15,470 BTC on May 21 to 7,239 BTC on June 13, as per CryptoQuant. Bitcoin’s price fell from over $71,100 on June 5 to $66,800 currently, while daily miner flows to exchanges continued to decline.
The decline in hashrate might also be due to mining firms shutting down older generation ASIC chip mining rigs. These rigs have become unprofitable since the fourth Bitcoin halving.
Future Predictions and Mining Profitability
Bitcoin’s total hashrate dropped to 586,377 TH/s on June 12, according to Blockchain.com. An April 19 report by CoinShares predicted this temporary drop, expecting the hashrate to surge in 2025. The report states:
“Our model forecasts the hash rate rising to 700 exahash by 2025, although after the halving, it could fall by up to 10% as miners turn off unprofitable ASICs.”
The reduction is attributed to increased mining costs due to the halving and rising electricity costs. The profitability of mining operations largely depends on electricity costs. According to Hashrate Index, older ASIC models like the S19 XP and M50S++ operate at a loss with electricity costs above $0.09 per kilowatt-hour.
In conclusion, while Bitcoin’s hashrate decline indicates potential miner capitulation, the actual selling of Bitcoin by miners remains low, suggesting other factors at play.
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