Bitcoin’s network hashrate dropped by 4% in the month leading up to December 15, a trend that some analysts view as a potential bullish indicator for the cryptocurrency’s price.
VanEck analysts Matt Sigel and Patrick Bush described the move as a “historically bullish contrarian signal” in a report on Monday.
They noted that when hash rate compression continues over extended periods, positive forward returns for Bitcoin tend to occur more frequently and with higher gains.
Since 2014, Bitcoin has posted positive 90-day forward returns 65% of the time when its 30-day hashrate declined, compared with 54% when the hashrate increased.
Looking further ahead, negative 90-day hashrate growth has been followed by positive 180-day returns 77% of the time, with an average gain of 72%, outperforming periods of hashrate growth, which produced 61% positive returns.
This trend is encouraging for miners, as a potential rise in Bitcoin’s price could increase profitability or allow previously unprofitable miners to resume operations.
Bitcoin is currently trading around $88,400, down nearly 30% from its October 6 all-time high of $126,080.
The breakeven electricity price for mining on a Bitmain S19 XP rig has fallen nearly 36%, from $0.12 per kilowatt-hour in December 2024 to $0.077/kWh by mid-December.
The drop in hashrate, the steepest since April 2024, is believed to be driven by the shutdown of approximately 1.3 gigawatts of mining capacity in China.
Analysts suggest that a portion of this energy could be redirected to meet rising demand in artificial intelligence, potentially reducing Bitcoin’s network power by around 10%.
Despite the decline in some regions, nations continue to support Bitcoin mining.
Up to 13 countries, including Russia, France, Bhutan, Iran, El Salvador, the UAE, Oman, Ethiopia, Argentina, Kenya, and recently Japan, are backing mining operations.
The recent hashrate drop highlights the cyclical nature of the industry, where shifts in capacity and energy usage can create opportunities for investors and miners alike.
As Bitcoin miners navigate changing conditions, industry observers are watching network trends closely for early signals of market movements.
