Mining capitulation signals emerge, VanEck states Bitcoin price bottom has been established

Recent market analysis indicates that the mining industry is currently undergoing a large-scale reshuffle. As mining difficulty rises and profit margins narrow, less efficient operators are gradually being forced out of the network. This phenomenon of “miner capitulation” has historically often signaled a turning point in cryptocurrency asset prices.

According to the latest research report from asset management firm VanEck, the current drop in Bitcoin hash rate is the most significant since April 2024, reflecting the formation of a bottom. As of writing, BTC trading prices have reached $91.82K, and market expectations for a subsequent breakout are gradually strengthening.

Market Signals Behind the Sharp Hash Rate Decline

VanEck’s on-chain data research shows that Bitcoin’s hash rate decreased by about 4% month-over-month in mid-December this year. Although this decline seems minor, it is highly significant in historical context. The analysis indicates that data since 2014 shows that when network hash rate enters a compression cycle, there is a 65% probability that Bitcoin prices will yield positive returns within the following 90 days.

More notably, the longer the hash rate remains in decline, the greater the strength and frequency of price increases tend to be. This suggests that the current miner capitulation is not just a short-term market clearing but may also be brewing a more resilient upward cycle.

Research estimates that approximately 1.3 GW of mining capacity in China has shut down, which is the main driver of this hash rate decline. Some of this electricity capacity is being redirected toward artificial intelligence applications, potentially reducing Bitcoin’s total hash rate by as much as 10% in the end.

Mining Economics Face Severe Challenges

The sharp decline in profitability is accelerating industry cleanup. For example, the mainstream Antminer S19 XP has seen its breakeven electricity cost drop from around $0.12/kWh at the end of 2024 to about $0.077/kWh, a decrease of over 35%. This means that the operational window for most miners is continuously narrowing.

The decline in breakeven points directly reflects the operational difficulties faced by the current mining industry—only operators with access to ultra-low electricity prices can remain profitable during this cycle. Small and medium-sized operators and older, less efficient mining farms are accelerating their exit, embodying the essence of “miner capitulation.”

According to VanEck’s statistics, the deteriorating long-term profitability environment has led to the shutdown of approximately 400,000 Bitcoin mining machines. Meanwhile, they observe that up to 13 countries are actively developing their mining industries at the official level, indicating a profound adjustment in global hash rate distribution.

Market Bottom Characteristics Becoming More Apparent

When miners capitulate en masse under financial pressure, it usually indicates that the market has already digested most of the pessimistic expectations. Historical patterns show that such periods are often accumulation phases for medium- to long-term opportunities. As inefficient capacity is cleared, the remaining mining networks will experience a relative improvement in profitability.

Bitcoin’s current price has broken above the $91K threshold, approaching previous resistance levels. With signals of miner capitulation and on-chain data both confirming, market expectations for a subsequent breakout are gradually heating up.