In 2024, Bitcoin miners have already experienced the first capitulation event, though some risks still linger. Based on the Hash Ribbons and Difficulty Ribbons metrics, along with our capitulation identifier, which is sensitive to Bitcoin network data, we have been able to identify moments of Moderate Capitulation and Aggressive Capitulation.
Moderate Capitulation
Moderate Capitulation occurs when some miners decide to shut down or reduce their operations, typically after selling BTC or making strategic business adjustments.
Aggressive Capitulation
Aggressive Capitulation, on the other hand, is a rare event that happens when many miners are forced to cease operations due to sharp drops in Bitcoinâs price or exceptional events, such as the 2021 cryptocurrency mining ban in China. This type of capitulation is marked by high volatility and often coincides with Bitcoin price bottoms.
Historically, Aggressive Capitulation has followed periods of high miner revenue during bull markets. This was the case in 2011, 2018, and 2021. Another important factor is significant changes in the Hash Rate compared to the network difficulty, which takes around 14 days to adjust. This window can be critical for miners, as capitulation events generally do not last more than two weeks.
Capitulation in 2024
In June 2024, a Moderate Capitulation event was recorded when miners reached the lowest daily revenue per hash in history, forcing many to reassess their operational strategies.
We also observed that revenue in USD has followed a consistent growth channel, reaching a peak of $105 million USD in 2024. This channel has served as effective support and resistance. However, unlike previous cycles, post-halving revenue has not recovered, indicating a different dynamic for mining in 2024, particularly with the increase in mining activity in the United States.
Impact of Large Companies and Mining Centralization
The growing presence of large mining companies has directly impacted on-chain metrics. The correlation between the performance of these companies' stocks and on-chain metrics has become more apparent, suggesting a more competitive and centralized market.
The centralization of Bitcoin mining is a growing concern. Large corporations have increased computational power, negatively affecting smaller miners who lack the resources to optimize or purchase new ASIC equipment. This trend poses risks to the future of the network, as the shutdown of a large mining company could cause a significant drop in the Hash Rate, potentially leading other miners to halt their operations, thus triggering a new capitulation event.
