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Bitcoin Miners Are Fed Up But It's Good News for BTC

Bitcoin miners pulling the plug, which could signal the bottom of the leading cryptocurrency's price decline

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Bitcoin miners are putting down their computer picks and cashing in on their efforts but it could strengthen the price of BTC.

Since the end of last month, Bitcoin's total hash rate has declined from 658 exahashes per second (EH/s) to 556 EH/s. This weekend, Bitcoin's block mining difficulty has declined 7.8% from 83.68 terahashes per second (TH/s) to 79.5 TH/s.

Essentially, Bitcoin miners are reducing their efforts due to declining profitability, which is also known as "miner capitulation." As miners earn their revenue in Bitcoin, their income is heavily influenced by the price of BTC. Consequently, the significant price drop in Bitcoin since March has considerably reduced the mining industry's overall income.

Miner capitulation is not an uncommon occurrence. After the collapse of FTX in December 2022, a similar pullback was noticed when mining companies defaulted on their debt. As a result, Bitcoin's price bottomed out, marking the end of the bear market.

Ki Young Ju, founder and CEO of cryptocurrency analytics firm CryptoQuant, said on X that miner capitulation is continuing.

“Miner capitulation is still ongoing,” he said. “Historically, it ends when the daily average mined value is 40% of the yearly average; it's now at 72%.”

Blockhead's BRN analyst, Valentin Fournier, explained that miner capitulation is causing Bitcoin to break its downward trend.

"Miners are capitulating as they have been underpaid for months, leading them to unplug many unprofitable machines," he explained. "The hashrate drawdown is equivalent to the one that occurred after the FTX collapse. Historically, these drawdowns have happened after large bear markets and have preceded significant, long-term rallies."

Despite miners pulling the plug, private equity money seems to be flooding into mining rigs. In an interview with CoinDesk, Core Scientific's Adam Sullivan revealed that several approaches have been made from private equity firms to finance their AI-related partnerships.

"Private equity is obviously chasing the data center space right now; even private equity firms that haven't necessarily done data centers before are evaluating the space," Sullivan said.

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Bitcoin miners can help AI-related firms store their machines in already-built data centre infrastructures, rather than AI firms building these facilities themselves.