Bitcoin Miners Confront Capitulation as Profitability Fades During BTC Market Decline

Bitcoin miners are currently confronting a pivotal phase termed as “capitulation” amidst dwindling profits amidst a downturn in the Bitcoin market.
According to a recent update on X, CryptoQuant, a market intelligence firm, disclosed that indicators reflecting miner capitulation are nearing levels akin to those seen following the FTX crash in late 2022, hinting at a possible Bitcoin market bottom.
Miner capitulation unfolds as miners scale back operations or liquidate portions of their mined Bitcoin holdings to sustain operations, secure returns, or hedge Bitcoin exposure.
In recent weeks, CryptoQuant analysts have pinpointed multiple signs of capitulation coinciding with a 13% decline in Bitcoin’s price from $68,791 to $59,603.
Declining Bitcoin Hashrate
A significant metric of capitulation is the drop in Bitcoin’s hashrate, which signifies the total computational power underpinning the Bitcoin network.
The hashrate has seen a substantial 7.7% decrease, plunging to a four-month low of 576 EH/s subsequent to its peak on April 27.
The similarity between this decline and conditions post-FTX crash in December 2022 suggests a probable market bottom.
It’s notable that the recent 7.7% decline in hashrate mirrors the drop witnessed in late 2022, when Bitcoin hit a bottom at $15,500 before soaring over 300% in the ensuing 15 months.
The CryptoQuant report also underscores the challenges miners have encountered post-halving.
During this period, miners have faced significant underpayments, as indicated by the miner profit/loss sustainability gauge.
Daily revenues have dwindled by 63% since the halving, when Bitcoin’s base block rewards and transaction fee earnings were higher.
From $79 million on March 6, total daily revenues have plummeted to $29 million presently.
Moreover, revenue from transaction fees now accounts for only 3.2% of total daily revenues, marking the lowest share since April 8.
Consequently, Bitcoin miners have resorted to tapping into their reserves to boost yield.
CryptoQuant data highlights a surge in daily miner outflows, hitting the highest volume since May 21, indicating potential sell-offs of BTC reserves by miners.
Bitcoin Price Decline Amid Sell-Off
The ongoing sell-off by miners, alongside transactions from Bitcoin whales and national governments, has contributed to Bitcoin’s recent price retracement.
On July 5, Bitcoin plummeted to a four-month low of $53,499.
This decline has also impacted miner profitability, measured by the “hash price,” which denotes miner earnings per unit of computational power.
Presently, average mining revenue per hash stands at $0.049 per EH/s, slightly above the all-time low of $0.045 registered on May 1.
As reported, the combined market capitalization of 14 U.S.-listed Bitcoin miners hit a record $22.8 billion on June 15.
Last month, Bitcoin mining stocks recorded significant gains following commitments by U.S. presidential candidate Donald Trump to bolster domestic mining activities.
Trump had then expressed his aspiration for all remaining Bitcoin production to be situated in the United States, emphasizing the potential for energy dominance.
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