U.Today – The capitulation of miners in the cryptocurrency market was not expected. However, it could have been the perfect solution to the current state of digital gold. Here's why it could become fuel for BTC growth.
Over the past 18 months, Bitcoin hashrate has been trending upward, which is representative of good security on the network; However, the data shows that the trend has been broken, indicating that some miners are throwing in the towel or, rather, abandoning mining altogether.
Miners' capitulation is manifested through a visible drop in hashrate, which measures the processing power dedicated to Bitcoin mining.
CryptoQuant's chart shows a decrease in the network's true hashrate. Otherwise constantly increasing, the true hashrate is experiencing a decline. From the lower band of the hashrate, we can effectively say that computing power is decreasing, a departure from the increase we had seen over the last year and a half.
This could be due to the increased cost of operations and lower profitability for miners, with the halving not occurring, in terms of price performance. As the price of Bitcoin continues to decline, it becomes difficult for mining operations to remain profitable in their activities. Obviously, this led to some of the miners to completely shut down their rigs, while others reduced their mining activities.
A drop in hashrate usually leads to a readjustment period for Bitcoin. Miner capitulation adjusts the mining difficulty to an easier path for the remaining miners to mine blocks. This adjustment can lend itself to efficiency and even cost reduction for active miners.
In the past, major price action appeared after drops in hashrate. Miners' capitulation may currently reduce selling pressure. With decreasing selling pressure, the price of an asset can stabilize and even increase if demand now exceeds supply.
This article was originally published on U.Today.
