Bitcoin’s network hashrate fell 4% in the month through Dec. 15, a development that could set the stage for stronger price performance in the months ahead, according to analysts at VanEck.
Key Takeaways:
- Bitcoin’s hashrate fell 4% in December, a pattern VanEck says has historically preceded stronger price returns.
- Miner profitability is under pressure as lower BTC prices and higher costs force capacity offline.
- Part of the hashrate decline may be permanent, with mining power shifting toward AI workloads.
In a note published Monday, VanEck’s head of crypto research Matt Sigel and senior investment analyst Patrick Bush described sustained declines in hashrate as a historically bullish signal.
The metric, which tracks the total computational power securing the Bitcoin network, is often viewed as a proxy for miner confidence and profitability.
“When hash rate compression persists over longer periods, positive forward returns tend to occur more often and with greater magnitude,” the analysts wrote.
Bitcoin Historically Posts Stronger Returns After Hashrate Declines: VanEck
Since 2014, Bitcoin’s 90-day forward returns have been positive 65% of the time following a 30-day decline in hashrate, compared with 54% when hashrate increased over the same period.
The trend becomes more pronounced over longer horizons. VanEck data shows that negative 90-day hashrate growth has been followed by positive 180-day Bitcoin returns 77% of the time, with an average gain of 72%.
That compares with a 61% positive return rate when hashrate rose.
The decline comes at a challenging moment for miners. Bitcoin is trading around $88,400, nearly 30% below its Oct. 6 all-time high of $126,080, according to CoinGecko.
Lower prices, combined with rising operational costs in some regions, have squeezed margins across the sector.
Sigel and Bush highlighted that the breakeven electricity cost for a 2022-era Bitmain S19 XP miner, one of the most widely used machines, has dropped nearly 36% year over year, from $0.12 per kilowatt-hour in December 2024 to roughly $0.077/kWh by mid-December.
The sharp decline reflects how many miners have been forced to shut down or operate at a loss.
The analysts attributed much of December’s hashrate drop, the steepest since April 2024, to the shutdown of roughly 1.3 gigawatts of mining capacity in China.
They added that some of this power may be redirected toward artificial intelligence workloads, a shift that could eventually remove as much as 10% of Bitcoin’s hashrate from the network.
State-Backed Bitcoin Mining Expands as Miner Capitulation Signals Recovery
Despite near-term pressure, state-backed mining activity continues to expand.
VanEck estimates that as many as 13 countries now support Bitcoin mining in some form, including Russia, France, Bhutan, Iran, El Salvador, the UAE, Oman, Ethiopia, Argentina, Kenya and Japan.
For investors, the analysts argue that miner capitulation has often marked periods of consolidation that precede broader recoveries.
Last week, K33 also said Bitcoin’s prolonged sell-side pressure from long-term holders may be approaching its limits after years of steady distribution.
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