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Highlights
- Many Bitcoin mining companies have reduced their investments in mining rigs.
- Bitcoin miners are exploring other Proof-of-Work (PoW) cryptocurrencies to hedge against market uncertainty.
- The current miner capitulation mirrors the significant decline in profitability seen in December 2022.
The Bitcoin miner capitulation following the Bitcoin halving event in April remains the most watched event. As per the on-chain data, the Bitcoin hash price has touched its all-time low as several miners reportedly turned off rigs since they couldn’t cope with the rising costs and dropping rewards.
Bitcoin Hash Price At All-time Low
In a recent update, CryptoQuant CEO Ki Young Ju mentioned that the Bitcoin hash price has reached an all-time low. This has led several mining companies to slow down their investments in mining rigs. Thus, as a hedge against the current bitcoin market uncertainty, miners have started looking for other Proof-of-Work (PoW) cryptocurrencies.
#Bitcoin hash price hit an all-time low. Many mining companies slowed mining rig investments, with some switching to other PoW coins to hedge against market uncertainty. https://t.co/fwTGWRzcz6 pic.twitter.com/j7qbAvXvXq
— Ki Young Ju (@ki_young_ju) June 28, 2024
As reported by CoinGape, top market players like Marathon Digital have already started to pivot by mining PoW currencies like Kaspa.
Ju further added that the current shift by the miners doesn’t signal the end of the current cycle. He further stated that Bitcoin mining companies aren’t long-term bearish about Bitcoin, however, they are just hedging and waiting for the buy-side liquidity to recover.
It will be interesting to see how long will the BTC miners continue to capitulate. As per QCP Capital, $58,000-$60,000 has proved to be a robust support level for Bitcoin throughout the second quarter. However, the market continues to face further selling pressure from the selling by governments as well as Mt. Gox’s Bitcoin release.
Also read: Bitcoin Sale By US and Germany Governments Is No Cause of Concern
QCP Capital believes that Bitcoin price will see further downside to $50,000 where it finds strong support. At this price point, there could be growing interest from traditional financial institutions.
Miner Capitulation at 18-Month Low
CryptoQuant has observed that Bitcoin miners are currently experiencing a significant decline in profitability, similar to the severe downturn witnessed in December 2022. During that period, miners faced a 7.6% drawdown in their earnings, coinciding with the lowest point of the market cycle after the FTX collapse.
#Bitcoin miner capitulation has reached levels comparable to December 2022: 7.6% drawdown.
December 2022 marked the cycle bottom after the FTX colapse. pic.twitter.com/8A3p2XDvXW
— Julio Moreno (@jjcmoreno) June 28, 2024
Also Read: Bitcoin Miner CleanSpark to Acquire GRIID for $155M
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