Bitcoin Hashrate Drops 4%, VanEck Predicts Bullish Trend

VanEck, a crypto asset manager, has released a report suggesting that the recent dip in Bitcoin mining activity indicates a potential price bottom. Historically, miner capitulation has been bullish for Bitcoin prices, with 90-day forward returns being positive 65% of the time during declining network hashrate periods.

Key Insights from VanEck's Report

The recent drop in Bitcoin's hashrate, around 4% through December 15, is the steepest since April 2024.
Falling hashrate often signals miner capitulation, where less efficient miners exit due to financial pressure.
During prolonged hashrate declines, positive forward returns are more frequent and substantial.

Impact on Mining Profitability

The breakeven electricity cost for mining rigs like Antminer S19 XP has decreased from $0.12 to $0.077 per kilowatt-hour.
This decline reflects worsening mining economics, favoring operators with access to cheaper electricity.
The recent hashrate drop was attributed to a shutdown of about 1.3 gigawatts of mining capacity in China.
This shutdown could redirect power to support AI workloads, potentially reducing Bitcoin’s total hashrate by up to 10%.

Approximately 400,000 Bitcoin mining machines have gone offline due to weak mining profitability. VanEck notes that 13 countries currently support Bitcoin mining with central government backing.