Bitcoin’s hashrate has recently experienced a significant decline after an 18-month period of growth, indicating a potential capitulation among Bitcoin miners. The true hashrate of Bitcoin dropped to approximately 600 exahashes per second (EH/s) following the uptrend, which is a key metric used to gauge the level of difficulty for miners to mine Bitcoin.
This downward trend in the hashrate suggests that some Bitcoin mining companies may be offloading their BTC holdings, as noted by Ki Young Ju, the founder and CEO of CryptoQuant. Despite this development, data shows that mining firms have not been selling substantial amounts of Bitcoin, with the flow of Bitcoin from miners to cryptocurrency exchanges decreasing from 15,470 BTC in May to 7,239 BTC in June.
The decrease in Bitcoin’s price from $71,100 to $66,800 does not appear to be directly linked to miner capitulation, as daily miner flows to exchanges have continued to decline steadily. The drop in the true hashrate of Bitcoin could also be attributed to mining companies shutting down older generation ASIC chip mining rigs that have become unprofitable post the fourth Bitcoin halving.
While the total hashrate of Bitcoin fell to 586,377 TH/s on June 12, experts predict a surge in the hash rate by 2025. This temporary reduction in hashrate is linked to the increased costs of Bitcoin mining following the halving, coupled with rising electricity expenses.
The profitability of mining operations is heavily dependent on electricity costs, with older ASIC models like the S19 XP and M50S++ operating at a loss if electricity costs exceed $0.0 per kilowatt-hour. Despite these challenges, the hash rate is expected to rebound in the coming years, as highlighted in a report by CoinShares.