Bitcoin in decline Mining activity is often interpreted as a sign of network stress, reflecting weaker miner profitability, declining hashrate, and concerns about the economic sustainability of mining operations. It is commonly assumed to be bad for the price of bitcoin.
However, digital asset investment firm VanEck maintains that periods of declining hashrate (the total computing power used by miners to secure the bitcoin network and process transactions) have historically functioned as a contrarian indicator, indicating improving price momentum rather than a sign of structural weakness.
This dynamic is emerging as bitcoin trades around $87,000, following a 36% drop from October’s all-time high.
Over the past 30 days, the bitcoin network hashrate recorded its steepest drop since April 2024, as miners faced compressed margins due to a weaker BTC price and that month’s “halving,” an event that reduces block rewards by 50% roughly every four years, reducing new issuance of bitcoins.
VanEck notes that the hashrate reduction when bitcoin prices fall reflects the capitulation of miners, with inefficient or highly leveraged operators closing or selling bitcoins, contributing to spot pressure on the sell side.
In reality, hashrate drops tend to lag behind price drops. According to VanEck, momentum has historically placed the market closer to cyclical lows than highs. As higher cost miners exit, lower difficulty adjustments occur, making it easier to mine bitcoins and ensuring blocks are produced at a constant rate. The resulting improvement in miners’ profitability facilitates forced sales.
The current price correction appears selective, VanEck noted, with closures concentrated on higher-cost or geopolitically exposed deals.
VanEck found that when 90-day hashrate growth has been negative, bitcoin has returned positive 180-day returns 77% of the time, meaning that the price performance over the following six months is higher than the average during periods of hashrate growth.
The firm estimated that buying bitcoin during sustained hashrate corrections has improved 180-day returns by approximately 2,400 basis points, reinforcing miners’ capitulation as one of bitcoin’s most enduring contrarian signals.
