As summer approaches, CryptoQuant cautions that Bitcoin miners may encounter significant challenges if prices fail to rebound significantly during this period. Despite Bitcoin's current price drop below $58,000, extensive capitulation among miners has not yet occurred. Julio Moreno, CryptoQuant's head of research, highlights that the network hashrate remains elevated, indicating that miners with efficient equipment can still generate profits. However, retail miners using older ASICs may experience losses due to increased electricity costs, and capitulation may ensue based on future hashrate and price trends.
Bitcoin Miners Face Looming Challenges as Summer Temperatures Rise
Amidst the impending arrival of summer, CryptoQuant has issued a stern warning to Bitcoin miners, cautioning them about the potential for significant challenges ahead. The primary concern stems from the possibility that Bitcoin prices may not experience substantial recovery during the warmer months.
Despite Bitcoin's recent price dip below the $58,000 mark, which has prompted weaker investors to liquidate their holdings, large-scale capitulation among Bitcoin miners has yet to materialize. CryptoQuant's head of research, Julio Moreno, has indicated in an exclusive interview with crypto.news that the network hashrate remains marginally higher than its pre-halving levels. Moreno attributes this to the fact that miners can still extract profits with "relatively efficient equipment."
The profitability of Bitcoin mining remains evident from the break-even electricity price for ASIC models S19 and S21, which continue to exceed the electricity costs of large industrial miners (as illustrated by the green area in the accompanying chart).
However, Moreno has also highlighted concerns regarding the potential for some retail miners to encounter negative profits, especially those utilizing older ASIC models such as the S17 and S19. This situation arises due to the higher electricity costs associated with these older models. Moreno further emphasizes that a capitulation event for miners will be contingent on the combined evolution of network hashrate and Bitcoin prices in the coming weeks.
Addressing apprehensions about potential price volatility during the customary summer trading slowdown, Moreno has stressed that miners tend to react to price movements rather than instigate them. Nevertheless, he has not dismissed the possibility of Bitcoin experiencing increased selling pressure in the upcoming months.
"The market is more likely to witness miner capitulation if prices fail to rebound significantly during the summer. This is especially pertinent considering the hashprice (average miner revenue per hash) is reaching new lows," Moreno said.
As reported previously by crypto.news, Bitcoin miners have refrained from selling their cryptocurrency holdings despite a drop in their revenue to levels last seen in early 2023 following the most recent halving event, which reduced fixed block rewards from 6.25 BTC to 3.125 BTC. According to CryptoQuant CEO Ki Young Ju, miners currently face a dual choice: capitulate or anticipate a resurgence in Bitcoin's price, which currently hovers below the $58,000 threshold.
