Bitcoin’s hashrate, a key measure of mining difficulty, has broken down from an 18-month uptrend, suggesting potential miner capitulation.
The true hashrate recently fell to around 600 exahashes per second (EH/s).
This breakdown might indicate that some mining firms are selling their BTC, as noted by Ki Young Ju, founder and CEO of CryptoQuant.
He stated in a June 13 X post, “Bitcoin hash rate’s 18-month upward trend has broken, suggesting some miners are capitulating.”
However, data shows that Bitcoin mining firms haven’t been selling significant amounts of Bitcoin despite the drop in hashrate.
According to CryptoQuant, miner flows to cryptocurrency exchanges decreased from a monthly peak of 15,470 BTC on May 21 to just 7,239 BTC on June 13.
The recent decline in Bitcoin’s price, falling from over $71,100 on June 5 to $66,800, doesn’t appear to be driven by miner capitulation.
Instead, the price drop occurred while daily miner flows to exchanges continued to decline.
The decline in hashrate could be due to mining firms turning off older generation ASIC chip mining rigs, which have become unprofitable since the fourth Bitcoin halving.
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On June 12, Bitcoin’s total hashrate fell to 586,377 terahashes per second (TH/s), according to Blockchain.com.
An April 19 report by CoinShares predicted this temporary drop, forecasting the hash rate to rise to 700 exahash by 2025 but potentially falling by up to 10% post-halving as miners shut down unprofitable ASICs.
The report attributes the temporary reduction to increased mining costs due to the halving and rising electricity prices.
The profitability of mining operations largely depends on electricity costs.
According to a May 2 X post by Hashrate Index, older ASIC models like the S19 XP and M50S++ operate at a loss if electricity costs exceed $0.09 per kilowatt-hour.
The S19j Pro+, j Pros, and M30S++ will struggle if costs are between $0.06 and $0.07 per kilowatt-hour.
The situation underscores the delicate balance between mining profitability and operational costs, with electricity prices playing a crucial role in the sustainability of mining operations.
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