Bitcoin Miner Capitulation: Why Falling Hashrate Might Be a Bullish Signal

While a declining hashrate often sparks concern within the crypto community, investment management firm VanEck suggests that recent network cooling could actually be an "encouraging sign." According to a report by Matt Sigel and Patrick Bush, historical data indicates that periods of miner capitulation frequently serve as contrarian indicators for significant price rallies.

The "Hashrate Decline" Paradox

VanEck’s research highlights a surprising trend: Bitcoin’s long-term returns have historically been stronger following a dip in hashing power than during periods of growth.

• Better Entry Points: Since 2014, BTC has delivered positive 90-day returns 65% of the time after a monthly hashrate drop, compared to just 54% when the hashrate rose.
• Higher Average Gains: When 90-day hashrate growth turns negative, Bitcoin’s average six-month returns soar to 72%, outperforming the 48% average seen during hashrate increases.
• The "Bottom" Signal: A negative 90-day growth trend in hashrate has historically provided an entry point worth an additional 2,400 basis points in returns over a half-year period.

Why is the Hashrate Falling Now?

The network is currently experiencing its sharpest decline since early 2024, driven by two primary factors:

1. China’s Sudden Shutdown: Government inspections in the Xinjiang region led to the closure of 1.3 GW of capacity. Industry veteran Jack Kong confirmed the loss of roughly 400,000 mining machines, wiping out 100 exahashes per second in a single day.
2. Market Volatility: Bitcoin’s price has retreated 9% over the last month, with volatility spiking to levels not seen since April 2025. This has squeezed miner margins, forcing less efficient operators to go offline.

A Global Shift and Bullish Accumulation

Despite the turmoil in China, Bitcoin mining remains a global endeavor. At least 13 countries—including Russia, Bhutan, El Salvador, and Japan—are now actively supporting or hosting mining operations, ensuring the network remains decentralized.

Furthermore, on-chain data reveals a silver lining: Bitcoin Digital Asset Trusts (DATs) have used this period of weakness to accumulate. Between mid-November and mid-December, these entities added 42,000 BTC to their holdings, marking their largest buying spree since the summer of 2025.

The Verdict

While skeptics view the falling hashrate as a sign of industry distress, the historical data suggests a different story. If VanEck’s analysis holds true, the current "miner pain" may be the necessary foundation for Bitcoin’s next major leg up.

December 2025, Cryptoniteuae