Bitcoin Hashrate Drops 4% in December – VanEck Spots Bullish Signal in the Dip

Mining power takes a breather. That's the headline as Bitcoin's computational backbone shows a slight pullback—a 4% dip in December that's got analysts leaning forward, not back.

The Hashrate Shuffle

Forget panic. This isn't a network failure; it's a natural market rhythm. When mining profitability gets squeezed—whether by energy costs or Bitcoin's own price action—less efficient rigs power down. It's a classic efficiency purge, a Darwinian moment for network participants that often precedes a leaner, meaner operational base.

Reading the Tea Leaves

VanEck's team sees the glass as half full. Historically, significant hashrate drawdowns have coincided with price bottoms, not tops. It signals capitulation among marginal miners, reducing sell pressure from operations needing to cover costs. When the weak hands fold, the foundation for the next leg up gets quietly poured. It's the market's brutal, automated way of cutting the dead weight—something traditional finance could use a dose of, instead of its usual bailouts and boardroom bonuses.

The Bullish Counter-Narrative

A temporary hashrate drop can be a contrarian green light. It suggests a washout. The remaining miners are the committed, low-cost operators. Network security adjusts, and with sell-side pressure from miners easing, the stage is set. The next wave of demand doesn't meet a wall of forced selling; it meets scarcity. That's when the math gets interesting.

Don't mistake a short-term metric for a long-term trend. Bitcoin's network has weathered far steeper drops and roared back stronger. This 4% shift isn't an alarm; for the bulls, it's a starting gun.

Bitcoin Historically Posts Stronger Returns After Hashrate Declines: VanEck

Since 2014, Bitcoin’s 90-day forward returns have been positive 65% of the time following a 30-day decline in hashrate, compared with 54% when hashrate increased over the same period.

The trend becomes more pronounced over longer horizons. VanEck data shows that negative 90-day hashrate growth has been followed by positive 180-day bitcoin returns 77% of the time, with an average gain of 72%.

That compares with a 61% positive return rate when hashrate rose.

The decline comes at a challenging moment for miners. Bitcoin is trading around $88,400, nearly 30% below its Oct. 6 all-time high of $126,080, according to CoinGecko.

Lower prices, combined with rising operational costs in some regions, have squeezed margins across the sector.

ICYMI: #VanEck highlights miner capitulation as a possible #Bitcoin bottom. Hashrate fell 4% in 30 days, the sharpest drop since April 2024.

Historically, similar declines have led to higher prices 65% of the time over the next 90 days. pic.twitter.com/y6Nw0x7jeJ

Sigel and Bush highlighted that the breakeven electricity cost for a 2022-era Bitmain S19 XP miner, one of the most widely used machines, has dropped nearly 36% year over year, from $0.12 per kilowatt-hour in December 2024 to roughly $0.077/kWh by mid-December.

The sharp decline reflects how many miners have been forced to shut down or operate at a loss.

The analysts attributed much of December’s hashrate drop, the steepest since April 2024, to the shutdown of roughly 1.3 gigawatts of mining capacity in China.

They added that some of this power may be redirected toward artificial intelligence workloads, a shift that could eventually remove as much as 10% of Bitcoin’s hashrate from the network.

State-Backed Bitcoin Mining Expands as Miner Capitulation Signals Recovery

Despite near-term pressure, state-backed mining activity continues to expand.

VanEck estimates that as many as 13 countries now support Bitcoin mining in some form, including Russia, France, Bhutan, Iran, El Salvador, the UAE, Oman, Ethiopia, Argentina, Kenya and Japan.

For investors, the analysts argue that miner capitulation has often marked periods of consolidation that precede broader recoveries.

Last week, K33 also said Bitcoin’s prolonged sell-side pressure from long-term holders may be approaching its limits after years of steady distribution.