The Bitcoin network is showing some signs of miner capitulation. This stage is marked by miners ceasing operations or selling part of Bitcoin reserves.
Interestingly, this process has been historically linked to a bottoming of Bitcoin prices, following which the asset is expected to resume a much-needed uptrend.
Signs of Bitcoin Miner Capitulation
Since the recent halving, the network hash rate has dropped by 7.7% from its peak on April 27. According to the latest report CryptoQuant, this decline suggests that less efficient miners have likely shut down their equipment due to negative profitability.
CryptoQuant’s miner profit/loss sustainability indicator reveals that miners have been significantly underpaid since April 20, the day after the 2024 Bitcoin halving,
Daily revenues have plummeted by 63% from $79 million on March 6th to $29 million currently, with transaction fees making up just 3.2% of the total revenue, the lowest share since April 8.
The average mining revenue per hash (hash price) is also hovering close to the all-time lows at $0.049 per EH/s, barely above the record low of $0.045 reached on May 1. Additionally, miners have been transferring Bitcoin out of their wallets at increased rates, with daily outflows spiking to their highest volume since May 21, indicating possible selling.
This current phase of miner capitulation mirrors the 7.7% hash rate drawdown observed in December 2022, a period that marked the bottom cycle following the FTX collapse. Historically, such significant declines have been linked to price-bottom conditions.
Darkest Before Dawn?
Further validating the price-bottom thesis is the fact that Bitcoin is currently trading at a significant discount on Coinbase, a sign that might indicate that the asset is setting the stage for the next upward movement.
Falcon’s head of research, David Lawant recently referenced the same in a post on X, questioning if it is “always darkest before the dawn.” The exec highlighted that the last time the Coinbase premium was this negative, it was followed by a massive rally from October 2023 to March 2024.
As a result, the current discount could be a precursor to a much-needed rally.