With the slowdown in the Bitcoin ecosystem and the halving event, inefficient miners have had to exit or suspend mining, causing Bitcoin’s hash rate to drop to levels not seen since the end of 2022. However, several analysts believe that this is a bullish sign.
In April of this year, Bitcoin completed its fourth halving, reducing block rewards for miners from 6.25 BTC to 3.125 BTC. Although the Rune protocol briefly allowed miners to earn substantial transaction fees, the dwindling popularity of the protocol has resulted in miners receiving less than 2 BTC in fees per day. As a result, miners who haven’t upgraded their mining efficiency have had to exit or suspend mining.
QCP Capital stated in mid-June that this phenomenon of miners being forced to sell their coins is the main reason why Bitcoin’s price is being limited from rising.
The surrender of miners is also reflected in the decline of Bitcoin’s network hash rate, which currently stands at 556.16 EH/s, a 7% decrease in the past 24 hours. According to data from CryptoQuant, the “Bitcoin hash rate drawdown” has reached its lowest level since December 2022. The hash rate drawdown refers to the decline in Bitcoin’s network hash rate compared to its previous peak. Since the Bitcoin network hash rate usually increases over time, this indicator can better measure the changes in Bitcoin’s network hash rate.
Last weekend, Ki Young Ju, the founder and CEO of CryptoQuant, agreed with a user’s viewpoint that the surrender of small-scale miners indicates a bullish trend, which is typically a sign of a bull market approaching. Market analyst Will Woo also echoed this sentiment, explaining that Bitcoin’s price will rebound once weaker miners surrender and network hash rate recovers. With the hash rate drawdown of Bitcoin now at historical lows, the hash rate is likely to gradually recover along with a price rebound.
Amidst the slowdown in the Bitcoin ecosystem and the halving event, Ki Young Ju recently stated that the withdrawal amount from miner-related wallets has decreased by 85%, indicating a weakening selling pressure from miners and providing support for Bitcoin’s price.
For further reading: Marathon, a Bitcoin mining company, announces a profit of $15 million from mining Kaspa for nine months, causing KAS to surge 15%.
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