Bitcoin Hashrate Drops Sharply as Miners Capitulate: Why Analysts See a Potential Bottom

Bitcoin has gone through another uncomfortable stretch, with prices sliding and volatility jumping sharply in recent weeks. On the surface, the market looks fragile. The data suggests this phase may be more about resetting excesses than signaling a lasting breakdown.

VanEck’s latest mid-December 2025 review highlights a market that is still under pressure but slowly rebuilding its foundations.

Why Hashrate Declines Matter

Hashrate measures the total computing power securing the Bitcoin network. When it falls, it usually means weaker or less efficient miners are being forced offline due to rising costs or falling prices. According to VanEck, Bitcoin has delivered positive returns about 65% of the time in the 90 days following a hashrate decline, compared to just 54% when hashrate is rising.

Over the past month, Bitcoin’s hashrate has dropped roughly 4%, marking the sharpest decline since April 2024. Analyst views this as a classic contrarian signal, often associated with miner capitulation rather than structural weakness.

Miner Pressure Is Building

Mining economics have become increasingly challenging. As Bitcoin’s price cooled, profitability for many operators declined sharply. The breakeven electricity cost for widely used rigs like the Antminer S19 XP has fallen from around $0.12 per kilowatt-hour in late 2024 to roughly $0.077 by mid-December 2025.

This shift means only miners with the lowest operating costs can remain competitive. While painful in the short term, this process historically helps flush out inefficient players, leading to a healthier mining ecosystem over time.

Moreover, these recent shutdowns in regions like Xinjiang, where inspections reportedly removed a large chunk of mining capacity, have added to the hashrate compression and reinforced the idea that capitulation is underway.

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Institutional Buyers Step In

While miners struggle, institutional players are moving in the opposite direction. VanEck notes that digital asset treasuries accumulated around 42,000 BTC over the past month, the strongest buying pace since mid-2025. These buyers appear less focused on short-term volatility and more interested in long-term positioning.

This divergence, with miners exiting and institutions accumulating, has historically appeared near cyclical lows rather than market tops.

Volatility Still a Key Risk

Despite these supportive signals, the broader market remains fragile. Bitcoin has fallen sharply from its recent highs, volatility is elevated, and on-chain activity, such as transaction fees and active addresses, remains subdued. These factors suggest that any recovery may be uneven rather than immediate.

What This Means Going Forward

Overall, the analyst believes the combination of hashrate compression, miner exits, and steady institutional buying increases the odds that Bitcoin is forming a cyclical bottom. However, macroeconomic uncertainty, regulatory developments, and geopolitical risks remain important variables.

For now, the data points to cautious optimism. Bitcoin may still face turbulence, but history suggests that periods like this often lay the groundwork for the next sustained move higher.

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