Bitcoin Hashrate Weakens as Miners Feel the Pressure – Why History Says That’s Bullish

Over the past month, Bitcoin’s computing power has pulled back noticeably, marking the sharpest contraction since early 2024.

According to analysis from VanEck, this slowdown reflects growing strain on miners rather than weakening demand for the asset itself. In previous cycles, similar conditions have frequently acted as a reset phase that preceded stronger price recoveries.

Miner stress has historically favored Bitcoin bulls

Instead of treating falling hashrate as a warning sign, VanEck researchers argue it should be viewed through a contrarian lens. Their long-term data shows that when miners begin shutting down machines and network power compresses, Bitcoin has tended to deliver better forward returns than during periods of rapid hashrate expansion.

Looking back over more than a decade, declines in short-term hashrate growth were followed by positive price performance more often than not. The pattern strengthens over longer timeframes, where six-month returns after hashrate pullbacks have been both more frequent and larger on average. In simple terms, miner capitulation has often marked moments when selling pressure is being exhausted rather than just beginning.

Profitability crunch forces weaker miners offline

The current slowdown appears to be driven by economics rather than sentiment. Electricity costs, hardware efficiency, and competition for power are squeezing margins across the industry. VanEck highlights that breakeven power costs for popular mining rigs such as the Bitmain S19 XP have dropped sharply, illustrating how quickly conditions have deteriorated for less efficient operators.

This squeeze has already translated into real-world consequences. Analysts estimate that roughly 1.3 gigawatts of mining capacity have recently gone offline in China alone, contributing to the network-wide decline in hashrate. At the same time, the rapid buildout of AI infrastructure is absorbing more energy resources, a shift that could further pressure Bitcoin miners competing for power.

Why a weaker network can precede stronger prices

While miners face near-term challenges, the broader implication may be constructive for Bitcoin. Historically, periods when inefficient miners are flushed out have reduced sell-side pressure and improved conditions for those who remain. If prices stabilize or begin to recover, surviving miners often see profitability rebound quickly.

With Bitcoin still trading well below its recent peak, VanEck suggests the current mining contraction could be part of a broader rebalancing process. Rather than signaling structural weakness, the hashrate dip may indicate that the market is quietly clearing excess leverage – a setup that, in past cycles, has often paved the way for stronger performance in the months ahead.

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