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A notable trend has emerged on the Bitcoin network in recent weeks. While hashrate has declined, miners have increased their Bitcoin sales. Although this exerts short-term pressure on the market, analysts suggest it could have positive long-term effects. Signals of miner capitulation, when compared to past cycles, are often seen as precursors to a new recovery phase.
Hashrate Down 15%: Miners Under Pressure
Crypto analyst James Van Straten noted that recent Bitcoin network data shows increasing pressure on miners. According to Van Straten, the network’s total computing power, measured as hashrate, has dropped approximately 15% from its peak in October. This decline highlights growing difficulties in mining operations and indicates that miner capitulation has been ongoing for around 60 days.
Data shows that the network’s average power, which was roughly 1.1 zettahash per second (ZH/s) in October, has fallen to about 977 exahash per second (EH/s) recently. This significant decline suggests that rising operational costs and reduced profitability have forced some miners to shut down their rigs or temporarily pause operations. Experts say this process also serves as a natural efficiency filter within the mining sector.
This trend is also reflected in Glassnode’s Hash Ribbon indicator. The indicator reversed on November 29, coinciding with Bitcoin’s approximate bottom near $80,000. The Hash Ribbon suggests that miners were compelled to sell BTC to sustain operations, creating additional short-term supply pressure on the market.
Van Straten emphasizes that miner capitulation historically serves as a contrary indicator. According to VanEck research, prolonged periods of miner stress have often preceded new upward momentum in Bitcoin prices. Inefficient miners exiting the market reduce selling pressure over time, allowing prices to recover. mThe Hash Ribbon indicates that if the 30-day moving average of hashrate crosses above the 60-day moving average, the most intense phase of capitulation may be over.
Difficulty Adjustments and AI Influence
The falling hashrate also triggers downward adjustments in Bitcoin mining difficulty. Current expectations suggest that difficulty will decrease by approximately 4% on January 22, reaching around 140 trillion. This implies that seven out of the last eight difficulty adjustment periods have seen negative changes. While lower difficulty can slightly improve profitability for remaining miners, overall network pressure has not yet fully eased.
Additionally, some miners are diversifying into alternative revenue streams such as artificial intelligence (AI) and high-performance computing (HPC). Large mining firms, like Riot Platforms, reportedly sell Bitcoin to fund capital-intensive AI and HPC projects. Analysts note that while this strategy may create short-term selling pressure, it fosters a more sustainable and diversified revenue model for the mining sector in the long run.
Assessment
Although the declining hashrate and increased miner sales create short-term market pressure, analysts believe this process contributes to a healthier and more balanced network. The exit of inefficient miners reduces selling pressure over time. Once this process completes, supply-side equilibrium is expected to form, leading to more stable and predictable price movements.
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