Bitcoin Hashrate Declines Significantly in Recent Days, Potentially Leading to Miner Capitulation. Activity on the Bitcoin network has also decreased significantly
A key indicator of the Bitcoin network’s processing power, the hashrate, has dropped to its lowest point since December 2022.
Bitcoin Hashrate Decline
According to Blockchain.com, Bitcoin’s hashrate has significantly declined this month, dropping to levels last seen during the turbulent period of the FTX exchange collapse in late 2022.
However, there is a key difference between these two situations. The current hashrate decline occurred after Bitcoin’s recent halving, which halved miner rewards to 3.125 Bitcoin per mined block.
The decline in hashrate indicates that some miners may be struggling to stay afloat. Bitcoin miners capitulate when they are forced to shut down operations due to unsustainable costs.
This typically happens when the cost of mining Bitcoin (including electricity, hardware, and maintenance fees) exceeds the revenue generated from mining rewards.
The recent halving has undoubtedly exacerbated this challenge for miners, as they now earn fewer Bitcoins for the same amount of work.
The current hashrate decline may indicate that some miners are capitulating and leaving the network.
If costs continue to rise, forcing miners to sell their holdings, BTC could face downward pressure, potentially leading to a significant adjustment.
Bitcoin Ecosystem in Trouble
As network activity decreases, miners are also grappling with reduced revenue from alternative sources. Initially, they benefited from high fees during the post-halving frenzy of the Bitcoin-based Runes protocol.
However, as network activity slows, earnings have plummeted.
Daily Runes trading volume has nosedived, dropping by 90%. Consequently, total earnings from Runes transactions for miners have also significantly decreased.
Meanwhile, overall NFT transactions on the network have also significantly declined in recent days. Data from CryptoSlam shows that sales of these NFTs have dropped by 68.32% over the past month.
Additionally, activity on the network has decreased.
Read Bitcoin’s [BTC] price prediction 2024-25
AMBCrypto’s analysis of Santiment data indicates that daily active addresses on the network have dropped significantly over the past 30 days, from 955,000 to 666,000 per day.
This decline in activity may further impact miners’ ability to generate substantial revenue.
