The price of Bitcoin has often risen after sustained decreases in the hash rate, a trend that may provide much-needed relief for many Bitcoin miners struggling with current prices.
The Bitcoin hash rate has decreased by 4% over the month until December 15, which may be a positive sign for the price of the cryptocurrency in the coming months, as the surrender of miners is "historically a controversial positive signal," according to Van Eck analysts.
"When hash rate pressure persists for longer periods, future positive returns tend to occur more frequently and with greater strength," noted Matt Siegel, head of cryptocurrency research at VanEck, and lead investment analyst Patrick Bush in a report on Monday.
It was noted that since 2014, the 90-day forward returns of Bitcoin have been positive 65% of the time when the network hash rate decreased over the previous 30 days, compared to 54% when the hash rate increased.
The pattern continues even when looking further out, as negative 90-day hash rate growth follows positive Bitcoin returns over 180 days 77% of the time with an average gain of 72%, outperforming the positive returns of 61% when the hash rate increased during the same period.
The trend is positive for Bitcoin (BTC) miners, as rising prices could expand profit margins for some or bring back miners that were previously unprofitable.
Bitcoin is currently trading at $88,400, down nearly 30% from its all-time high of $126,080 on October 6, according to CoinGecko data.
### Breakeven prices for miners have decreased by more than 35%
Siegel and Bush noted that the breakeven electricity price for a Bitmain S19 XP miner from 2022, one of the most popular Bitcoin mining machines, has decreased by about 36% from $0.12 per kilowatt-hour (kWh) in December 2024 to $0.077/kWh as of mid-December, highlighting the difficult conditions miners have found themselves in.
The change in breakeven price for the S19 XP since January 2020. Source: VanEck
VanEck analysts stated that the 4% drop in the Bitcoin hash rate, the largest since April 2024, was likely driven by a recent shutdown of about 1.3 gigawatts of mining capacity in China.
The duo stated that much of that energy could be repurposed to meet the growing demand for artificial intelligence, a trend the duo estimates could wipe out 10% of the Bitcoin hash rate.
### National governments still support companies for Bitcoin mining
Not all countries are moving away from Bitcoin mining, as Siegel and Bush estimate that up to 13 countries now support Bitcoin mining activities.
These include Russia, France, Bhutan, Iran, El Salvador, the United Arab Emirates, Oman, Ethiopia, Argentina, Kenya, and recently Japan.
