Mining Capitulation: VanEck Says BTC Hashrate Drops Signal Price Gains Ahead
BTC’s computational power dropped 4% in the 30 days through mid-December, marking the network’s sharpest contraction since April’s halving event. While this might appear bearish, digital asset manager reveals a counterintuitive pattern—periods of mining industry distress have historically preceded substantial price gains.
The current squeeze stems from BTC’s roughly 30% retreat from October’s $126,000 peak, combined with tight mining margins. Mid-generation equipment now requires electricity costs below $0.077 per kilowatt-hour to remain profitable—a 36% reduction from late 2024 breakeven levels. This economic pressure is forcing less efficient operations to shut down, creating what analysts view as a potentially bullish cleansing of the network’s fragileest participants.
The Capitulation Advantage
VanEck’s examination of network data stretching back to 2014 uncovers a striking pattern. During periods when hashrate declined over 30 days, BTC delivered positive returns in the subsequent 90 days approximately 65% of the time. When hashrate was expanding, that success rate dropped to 54%.
The correlation strengthens over longer horizons with negative 90-day hashrate growth preceded positive six-month returns 77% of the time, with average gains reaching 72%. This compares to 61% positive outcomes during hashrate expansion periods. As VanEck notes, “purchaseing BTC when 90-day hash rate growth is negative, rather than at any time, has historically improved 180-day forward returns by 2400 bps.”
The mechanism behind this paradox lies in mining economics showing that when BTC’s price falls, higher-cost operators face mounting losses and eventual capitulation. This forced tradeing creates short-term pressure, but it cleanses the network of its fragileest participants.
As inefficient miners exit, network hardy adjusts downward, improving profitability for survivors with access to cheap electricity or efficient equipment. These remaining miners face less pressure to liquidate holdings, reducing market supply and creating conditions for price appreciation.
the present conditions carry unique characteristics as the forcing roughly 400,000 machines offline. VanEck estimates that up to 10% of displaced computational resources may pivot toward artificial intelligence applications, where profitability currently exceeds cryptocurrency mining.
Institutional Conviction Amid Retail Retreat
Market behavior reveals a stark divide among BTC holders. Digital asset treasuries accumulated 42,000 BTC between mid-November and mid-December—the largest monthly acquisition since summer—pushing their combined holdings to approximately 1.09 million BTC. led with 29,400 BTC purchased during price fragileness.
Conversely, holdings declined by 120 basis points to 1.308 million BTC. On-chain analysis shows investors who acquired positions 1-5 years ago reduced balances substantially, with the 2-3 year cohort decreasing holdings by 12.5%. Meanwhile, coins held over five years remained static, suggesting long-term holder conviction.
BTC currently trades around $87,900, down approximately 9% over the past month. The cryptocurrency reached a low of $80,700 on November 22, pushing the 30-day RSI to 32. BTC perpetual futures basis rates collapsed to 5% annualized—compared to the year’s average of 7.4%—reflecting diminished speculative appetite.
VanEck’s research suggests the current environment shares characteristics with previous cyclical bottoms in 2018 and 2022, when miner capitulation preceded significant recoveries. However, analysts acknowledge that identifying market bottoms remains uncertain, with macroeconomic conditions and regulatory developments capable of overriding historical patterns.
