With the decline of the Bitcoin ecosystem and the halving event, inefficient miners have had to quit or temporarily suspend mining, causing Bitcoin’s hash rate to drop to the level of the end of 2022. However, multiple analysts believe that this is a bullish sign.
In April of this year, Bitcoin completed its fourth halving, reducing the block reward for miners from 6.25 BTC to 3.125 BTC. Although the Rune protocol once allowed miners to earn substantial transaction fees, the fading popularity of the protocol means that miners now earn less than 2 BTC in fees per day. Miners who have not upgraded their mining efficiency have had to quit or temporarily suspend mining.
QCP Capital stated in mid-June that this phenomenon of miners being forced to sell coins is the main reason limiting the rise of Bitcoin prices. The surrender of miners is also reflected in the decline of Bitcoin network hash rate. Currently, the global hash rate is 556.16 EH/s, a 7% drop 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 ratio of the current Bitcoin network hash rate compared to its previous peak. As the Bitcoin network hash rate usually increases over time, this indicator can better measure the changes in the Bitcoin network hash rate. Last weekend, Ki Young Ju, the founder and CEO of CryptoQuant, agreed with a netizen’s view that the surrender of small-scale miners is a bullish sign and is usually a characteristic before a bull market.
Market analyst Will Woo also echoed this sentiment, explaining that Bitcoin prices will rebound after weaker miners surrender and network hash rate recovers. Now that Bitcoin’s hash rate drawdown has reached a historical low, the hash rate may gradually increase, accompanied by a rebound in the price of the coin.
With the decline of the Bitcoin ecosystem and the halving event, Ki Young Ju recently stated in response to a question about the situation of mining companies from the perspective of production costs that the decrease in hash price has put immense pressure on inefficient miners. As this situation gradually eliminates inefficient miners, the mining cost of Bitcoin decreases, and miners who are still operating may not be eager to sell their Bitcoin for operational funds.
Data from CryptoQuant shows that the withdrawal volume from mining-related wallets on the 28th has decreased by 85%, from over 50,000 coins per day to less than 10,000 coins, indicating a weakening selling pressure from miners. This also supports the price of Bitcoin to some extent.
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