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Bitcoinâs historically rising prices
Miners may be in trouble, but VanEck says thatâs historically been a terrific time to buy Bitcoin.
Researchers at the global investment manager indicate that Bitcoinâs hashrate â the measure for how much compute power is used to mine Bitcoin â has fallen more in the last 30 days than it has since April 2024.
This drop, along with Bitcoinâs declining price, suggests that mining outfits are going offline as profitability is squeezed. The price of Bitcoin is trading at $87,500 on Tuesday, roughly 30% below its all-time high set in October.
As a key industry for the security of the $1.7 trillion asset, miner deterioration is a significant concern.
Still, VanEck says the dynamic offers a âcontrarian signalâ for Bitcoinâs price.
âWe find that forward returns are more likely to be positive when [the] Bitcoin hash rate is shrinking than when it is growing,â researchers wrote on Monday.
Additionally, they write, returns are typically higher over the following six months when the hash rate is falling.
âBitcoin miner capitulation may signal a bottom,â VanEck predicts.
87,500 on Tuesday, roughly 30% below
Since the Bitcoin halving event in April 2024, miners have been on the ropes.
The halving event occurs every four years. It halves the amount of Bitcoin miners earn for securing the network. This means mining operators are paid half as much to cover the same overhead costs, such as electricity, rent, and staff salaries.
And though hash rate may have decreased recently, the historical trend shows this rate continues to compound higher over the long term. This means that to remain competitive, miners must continuously invest in expanding their businesses.
Typically, these reduced rewards are offset by Bitcoinâs historically rising prices after halvings.
The price of Bitcoin rose 600% to more than $63,000 in April 2021 from just over $9,000 following the May 2020 halving event.
The rise has been less pronounced following the April 2024 halving event, however.
âIt is grim for miners right now,â Nick Hansen, CEO of mining outlet Luxor, previously told DL News.
VanEck added that though the hash rate has dropped some recently, that likely reflects a crackdown in mining operations in specific regions.
They cite Chinese miners in Xinjiang shutting down 1.3 gigawatts â enough power to service nearly one million US homes â following government scrutiny.
Likewise, the allure of artificial intelligence is also driving some mining operations to stay afloat.
âResisting the urge to transition to AIâ will be Bitcoin minersâ biggest challenge in 2026, Hansen told DL News in December.
VanEck already predicted the shift in 2024, forecasting that if the 12 major public miners shifted just 20% of their operations to AI, they would receive a nearly $14 billion bump to their annual profits.
Despite these factors, VanEck remains âcautiously optimistic.â
âThus, buying Bitcoin when 90-day hash rate growth is negative, rather than at any time, has historically improved 180-day forward returns by 24%.â
Liam Kelly is DL Newsâ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.
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