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Bitcoin miners’ capitulation looms, worst trend in two years

Bitcoin miners' capitulation looms, worse trend in two years

Bitcoin (BTC) miners continue to capitulate as the network’s hashrate faces its worst downtrend since 2022. The activity started giving signs of capitulation in the past few months, a situation that looms over the cryptocurrency‘s security.

As reported by Finbold on June 14, Bitcoin miners have signaled capitulation with a two-year low of their BTC reserves. The report also highlighted how the average production cost has been higher than the resulting revenue, with companies operating underwater.

Now, the network hashrate data, which indicates the activity’s production rate, continues to downtrend in a worrying pattern. In particular, data from shows a sequence of two lower highs after April 27’s peak of 639 EH/s.

Hashrate & Difficulty. Source:

Why is Bitcoin’s hashrate dropping, and what does it mean?

The industry should expect a rebound from this point, as happened during 2022’s bear market. However, June 27 saw a new low at 572 EH/s, back to values last seen in March. This opens the door for further lows, drastically impacting Bitcoin’s security.

Essentially, the hashrate drops when weaker Bitcoin miners shut down or unplug mining machines (ASICs). This causes an inevitable centralization of wealthier miners who manage to keep things running even in an unfavorable landscape. Therefore, the network’s security is diminished, considering its reliability on Proof of Work’s (PoW) proper decentralization and distribution.

Bitcoin analyst Joe Burnett posted a similar warning on June 26, and the situation worsens as time passes.

Bitcoin miners reserve at two-year lows amid capitulation

Meanwhile, Bitcoin miners continue to sell, with their reserves down-trending to even lower levels than previously reported earlier this month. Data from Santiment shows these entities currently hold 1.8 million BTC after an aggressive sell-off since February 2024. This number equals what miners held in April 2022, when BTC traded below $40,000.

Bitcoin supply held by miners. Source: Santiment / Finbold (Vini Barbosa)

Additionally, the Bitcoin average mining costs remain above the $80,000 level despite the hashrate drop, MacroMicro data shows. This suggests that miners could not only be capitulating by selling mining equipment or shutting down operations but also by selling BTC at a lower price than the average cost required to mine them.

Bitcoin – Average Mining Costs. Source: MacroMicro

Bitcoin mining benefits from economies of scale

According to multiple sources familiar with the matter, Bitcoin miners will operate underwater most of the time, and the activity is not profitable for medium and small players.

Interestingly, these entities often hedge their business with energy futures contracts or leverage themselves by borrowing or selling shares. Others will rely on side activities to remain relevant, like selling ASICs to miners or collecting mining pool fees. Moreover, these structures could generate heat for households or industries.

These dynamics can highly favor economies of scale, where big miners get higher rewards from the network and become bigger. Meanwhile, small and medium players could be forced to capitulate from the activity by selling BTC reserves or mining infrastructure.

In the long run, these events could contribute to an increased centralization of a few big entities, as Finbold reported.

Bitcoin hashrate and block discovery distribution (all, 3y, 1y, 24h). Source:

Furthermore, the selling pressure from these few Bitcoin miners can prevent BTC prices from surging unless demand picks up steam. In the meantime, Bitcoin spot trading and onchain transaction volumes float at record lows, increasing the challenges ahead.

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