The Bitcoin hashrate drawdown, a metric that measures dips in the relative computing power of the Bitcoin network, has dropped to levels not seen since December 2022—directly following the collapse of FTX during the depths of the previous bear market.
According to data from CryptoQuant, the True Bitcoin Hashrate Drawdown now stands at -7.6%, indicating a potential price bottom for the decentralized asset.
The case for a market bottom is supported by other metrics such as Bitcoin Exchange Reserve, the Miners Position Index (MPI), and the Bitcoin Miner Reserve, each suggesting low selling pressure.
Miner capitulation and the current cycle
Over the last several weeks, several indicators suggested that miners are beginning to capitulate, signaling potential buying opportunities for Bitcoin (BTC).
At the beginning of June, Charles Edwards, founder of crypto hedge fund Capriole, argued that the Bitcoin Hash Ribbons indicator developed by his firm was flashing a buy signal reflective of the relative slowdown in network computational power.
Hash ribbons measure the network’s hashrate by comparing the 60-day moving average of the Bitcoin hashrate against a 30-day average. When the 30-day average sinks below the 60-day average it indicates a relative decrease in hash power.
Market analyst Will Woo echoed Edwards by explaining that the market won’t reach new highs until weak miners are forced to shutter their operations—a phenomenon that traditionally occurs in the weeks following a halving event but seems to be dragging on during the current cycle.
More recently, Bitcoin miner withdrawals dropped by up to 90% post-halving, indicating that selling pressure from miners has been minimized and that Bitcoin's price will continue to rise.
Post-halving realities and the Bitcoin mining business
In anticipation of the April 2024 halving event, financial services firm Cantor Fitzgerald released a report highlighting the challenges miners would face following the decreased block subsidy.
The report identified 11 mining companies, including Marathon Digital, Hut8, and Argo Blockchain, potentially in danger of becoming unprofitable due to high mining costs and lower rewards.
According to that report, if the market price of Bitcoin plummets to $40,000, some of the world’s biggest mining companies would be forced to capitulate, highlighting the predicament of the mining industry post-halving.