Cryptocurrency

Public Bitcoin miners show we can expect a second capitulation

Zegex

Determining the market bottom requires a lot of guesswork. Bitcoin’s recent volatility has been attributed to a variety of factors, from geopolitical uncertainty and regional regulation to crypto market implosion.

Miners have historically been one of the most reliable predictors of Bitcoin’s performance.

Bitcoin miners form the foundation of crypto markets and create powerful resistance levels that reduce volatility. One of BTC’s biggest holders, miners can move the market by holding and liquidating coins.

To analyze the market situation, we need to analyze the Bitcoin miner situation.

As CryptoSlate previously covered, some of the surest indicators of miner health are hash ribbons.

Hash ribbons indicate when miners surrendered and show the divergence between the 30-day and 60-day moving averages of the Bitcoin hash rate. In other words, the market price of Bitcoin is too low to cover the electricity costs required to produce Bitcoin.

According to Hash Ribbon, the worst miner capitulation usually ends when Bitcoin hash rate’s 30-day moving average crosses above its 60-day moving average. Since the beginning of the year, we’ve seen three separate instances of this transition, shown in dark red in the chart below.

Bitcoin Miner Hash Ribbon Surrender
Chart showing the Bitcoin Hash Ribbon Indicator from January 2022 to October 2022 (Source: Glassnode)

Data analyzed by crypto slate It shows that a severe minor capitulation began in mid-June of this year and continued until mid-August. The data are supported by crossing hash ribbons shown in the graph above.

This trend is further supported when looking at the BTC holdings of the top nine listed Bitcoin mining companies. Several large miners generated significant selling pressure in May and June, liquidating around 8,765 BTC.

Month-to-month sales pressure looks to have stabilized since June, but the quarterly data tells a very different picture.

The holdings of the top nine public Bitcoin miners fell from 125,171 BTC in Q2 to 102,407 in Q3.

Bitcoin Miner Holding Surrender
Table showing the BTC holdings of the top 9 listed Bitcoin mining companies from January 2022 to September 2022

The numbers shown in the table above were further reduced in October. Earlier this month, Core Scientific liquidated over 1,000 BTC he held in September, report I only have 24 BTC on October 26th.

With mining difficulty and hashrate at all-time highs, miners are under pressure in terms of revenue and resources. The average hash rate in 2022 has been increasing quarter by quarter and is expected to grow at an even higher rate after Q4.

Bitcoin Miner Hashrate Surrender
Table showing the average hash rate of the top 7 public Bitcoin miners in 2022

Data analyzed by CryptoSlate showed that Bitcoin’s decline later this year caused a notable drop in miner earnings.

Minor Earnings Per Exahash Surrender
Chart showing Bitcoin miner revenue per exahash from 2011 to 2022 (Source: Glassnode)

Bitcoin price volatility, declining earnings, and declining BTC holdings are also impacting the stock market. Shares of all publicly traded bitcoin mining companies have fallen sharply since peaking in October 2021. Core Scientific is leading the way, with CORZ down nearly 90% over the past year, with Argo Blockchain and BitDigital trailing him down 88%. .

Bitcoin miner stock surrender
Graph showing stock prices of listed Bitcoin mining companies from October 2021 to October 2022 (Source: TradingView)

With hashrate expected to rise further and a bear market with no end in sight, we find the ongoing miner capitulation to continue through the end of the year. The worse is not over yet. If the current situation continues, we could see another miner surrender before the end of the year, creating additional selling pressure that could further shake sensitive markets.

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