Market intelligence firm CryptoQuant has detected signs of Bitcoin miner capitulation, a process in which some miners reduce their operations or sell a portion of their mined Bitcoin and reserves to stay afloat or earn yield. According to the firm’s analysts, these metrics are approaching the same level as the market bottom following the FTX crash in late 2022, potentially signaling a bottom for BTC.
One of the key indicators of miner capitulation is a decline in Bitcoin’s hashrate, which has experienced a 7.7% drop to hit a four-month low of 576 EH/s. This decline mirrors an equivalent drop in late 2022, when Bitcoin’s price bottomed at $15,500 before surging more than 300% over the next 15 months.
The report also noted that Bitcoin miners have been “extremely underpaid” for most of the period since the halving, as evidenced by the miner profit/loss sustainability indicator. As a result, miners have seen a 63% decline in daily revenues since the halving, forcing them to use their reserves to earn yield.
Daily miner outflows have spiked to the highest volume since May 21, suggesting that miners may be selling their BTC reserves. This sell-off, combined with sales from Bitcoin whales and national governments, has contributed to Bitcoin’s recent price pullback.
The decline has also impacted Bitcoin’s “hash price,” a measure of miner profitability per unit of computational power. Currently, the average mining revenue by hash is $0.049 per EH/s, just above the all-time low of $0.045 reached on May 1.
The situation is dire for some of the world’s biggest mining companies, with Cantor Fitzgerald reporting that they would be forced to capitulate if the market price of Bitcoin plummets to $40,000. The predicament of the mining industry is a significant concern, as it could have far-reaching implications for the overall health of the cryptocurrency market.
While the current situation is concerning, the capitulation of Bitcoin miners could ultimately be a buying opportunity for investors. As the market continues to navigate the challenges of the mining industry, it’s essential to stay informed and adapt to the changing landscape.
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Source: Cointelegraph
