Bitcoin: Miners' Surrender - Potential Price Floor or Rebound?

The misfortune of bitcoin miners after the halving is only getting worse. The halving of rewards threatens to seriously destabilize their finances. Indeed, miners’ daily revenues have plummeted dramatically, leaving many of them in a precarious situation. This could well trigger a massive capitulation, often a sign of major changes in the crypto ecosystem.

The Halving and Its Consequences for Bitcoin Miners

The recent halving of mining rewards, known as the halving, has plunged bitcoin miners into a financial abyss. Miners’ revenues have decreased by 63% since this event, dropping from $79 million per day to only $29 million.

Noting that the fact that BTC flirted with $57,800 this morning would not help these actors.

For many, this means turning off their machines, unable to cover operational costs with such reduced revenues.

This disastrous situation is eerily reminiscent of late 2022, when the market hit its lowest point after the collapse of FTX.

CryptoQuant, a blockchain analytics platform, has observed numerous indicators of miner capitulation. One of the most striking is the 7.7% drop in the hash rate since the halving, a decrease that illustrates the increasing difficulty for miners to maintain their activity.

The drop in the hash rate, which measures the total computing power of the Bitcoin network, has historically been associated with bearish market conditions.

This suggests even more difficult times ahead for miners, but also potential opportunities for investors looking for favorable entry points.

The Early Signs of Miner Capitulation

The capitulation of bitcoin miners is often seen as a buy signal by savvy investors. Indeed, when miners are forced to sell their BTC to cover their costs, it creates downward pressure on the price of bitcoin.

However, this movement can also signal that the market is reaching its lowest point, paving the way for a potential recovery.

Data from CryptoQuant show that miners are selling their bitcoin reserves at an accelerated rate. Daily BTC outflows from miners’ wallets have reached their highest level since May, indicating a massive sell-off.

This phenomenon could be interpreted as a sign that miners, desperate over the decline in their revenues, prefer to liquidate their assets rather than continue operating at a loss.

The “hash price”, a measure of miners’ profitability per unit of computing power, has also dropped to historically low levels. Currently, the average revenue per hash is $0.049 per EH/s, just above its all-time low of $0.045.

This decrease in profitability exacerbates the miners’ situation, forcing them to cease operations and sell their bitcoins, further fueling the downward spiral.

As miners capitulate, bitcoin might find a new bottom before bouncing back. Patience and strategic analysis will be key to navigating this tumultuous period.