Unraveling the Mystery Behind Bitcoin’s 20% Hashrate Drop: What’s Causing Miner Challenges?

  • Newcomers are joining the mining network as less efficient miners exit.
  • Positive signs from on-chain metrics indicate a potential uptrend.

Recent data on Bitcoin’s hashrate following the halving event has raised concerns about possible miner capitulation, according to CryptoQuant’s latest report. 

Bitcoin’s hashrate dropped after the 2024 halving, which reduced mining rewards. Despite hitting a year-to-date high in April, it has since declined by 20% to 585.7E, based on BitInfoCharts data.

BTC Hashrate

Source: BitInfoCharts

Maartunn highlighted that a decline in hashrate, especially after the halving, can indicate potential miner capitulation. This trend could be seen through the Hash Ribbons, which track Bitcoin’s hashrate moving averages.

A spike in Hash Ribbons signals a decrease in mining activity, leading less efficient miners to exit the market due to reduced profits.

Furthermore, the recent decline in Bitcoin’s hashrate has boosted the network’s Hash Ribbons, hinting at a possible miner capitulation. Maartun commented,

Sharp drops in hashrate, shown in green on the Bitcoin price chart, usually indicate ‘miner capitulation’.

BTC Mining DataBTC Mining Data

Source: CryptoQuant

Recent Trends in Bitcoin Mining

Bitcoin’s Miner Reserve has dropped post-halving, indicating miner coin sell-offs. The current Miner Reserve stands at 1.8 million BTC, down 1.1% since April 19th.

Additionally, due to decreased miner revenue from low transaction counts after the halving, BTC’s share of network volume has decreased.

Is It Time to Invest?

Analysts suggest that Bitcoin’s Hash Ribbons reaching high levels may present a buying opportunity for investors looking to capitalize on lower prices. Maartun stated,

“Hash Ribbons often coincide with significant price lows for BTC, making it a favorable time to benefit from price dips.”

This view is supported by BTC’s Market Value to Realized Value (MVRV) ratio, currently at -1.33%, indicating undervaluation.

Bitcoin MVRV RatioBitcoin MVRV Ratio

Source: Santiment

The MVRV ratio compares BTC’s current market price to its average acquisition price, indicating undervaluation when negative.

Explore Bitcoin’s [BTC] Price Prediction 2024-25

A negative MVRV ratio is seen as a buying signal, suggesting that the asset is trading below its historical average cost, making it an attractive investment.

Next: Achieving Bitcoin’s ATH in 2024

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