Falling bitcoin mining is often interpreted as a sign of network stress, reflecting weaker miner profitability, declining hash rate, and concerns over the economic sustainability of mining. It is widely believed to be bad for the bitcoin price.
However, digital asset investment firm VanEck argues that periods of declining hash rate — the total computational power used by miners to secure the bitcoin network and process transactions — have historically acted as a contrarian indicator indicating improved price momentum rather than a signal of structural weakness.
This momentum is emerging as bitcoin trades around $87,000, following a 36% peak-to-trough slide from October’s all-time high.
Over the past 30 days, bitcoin’s network hashrate recorded its steepest drop since April 2024 as miners faced compressed margins from a weaker BTC price and that month’s “halving,” an event that reduces block rewards by 50% roughly every four years, reducing the issuance of new bitcoins.
VanEck notes that the falling hash rate when bitcoin prices fall reflects miner capitulation, where inefficient or highly leveraged operators shut down or sell bitcoin, contributing to sell-side spot pressure.
In reality, hash rate declines tend to lag behind price declines. According to VanEck, timing has historically placed the market closer to cyclical bottoms than tops. As higher cost miners leave, lower difficulty adjustments occur, making it easier to mine bitcoin and ensuring that blocks are produced at a steady pace. The resulting improved miner profitability then facilitates forced sales.
The current price correction appears selective, VanEck noted, with shutdowns concentrated among higher-cost or geopolitically exposed operations.
VanEck found that when 90-day hashrate growth has been negative, bitcoin has delivered positive 180-day forward returns 77% of the time, meaning that price performance over the following six months is higher than average than during periods of rising hashrate.
The firm estimated that buying bitcoin during sustained hashrate corrections has improved 180-day forward returns by about 2,400 basis points, reinforcing miners’ capitulation as one of bitcoin’s more durable contrarian signals.
