Bitcoin miners show no signs of capitulation despite declining mining revenue

Ki Young Ju, CEO of CryptoQuant, reported on the challenges Bitcoin miners face following the BTC halving. He noted that miners have shown no sign of capitulation despite the decline in revenue from Bitcoin mining.

Notably, mining revenues plummeted to 14-month lows following the BTC halving event in mid-April.

Miners could capitulate or wait for a price increase

In an April 30 tweet, CryptoQuant’s CEO said that mining revenue dropped to low levels not seen since February 2023 after the halving.

The recent Bitcoin halving reduced block rewards to 3,125 BTC from 6.25 BTC, cutting mining revenue in half. One would expect miners to capitulate or sell some of their Bitcoin reserves to offset the bills. However, miners still maintained a neutral stance despite the drop in revenue while maintaining their cryptocurrency holdings.

According to Ju, miners now have two options. They could capitulate or wait for a rise in the price of Bitcoin to cover their expenses.

Ju said:

“Now they have two options: 1. Capitulate, or 2. Wait for the price of BTC to rise.”

Furthermore, the CEO stated that the miners currently show no signs of capitulation. He supported his statement with a reference to the 365-day Puell Multiple Chart, a metric used to determine the level of selling pressure of miners.

Usually, Bitcoin miners capitulate as the price of the primary crypto tokens fall. In such situations, less effective miners will withdraw from mining because their earnings will not cover the costs of mining.

Additionally, such miners may end up selling their BTC reserves, creating a further decline in the token’s price.

Meanwhile, Bitcoin mining revenues skyrocketed to reach over $100 million immediately after the BTC halving event. Furthermore, 75% of revenues came from taxes.

Rune Protocol degen and rare Satoshi hunters paid heavily as they jostled for space on the first blocks mined after the halving. However, demand for these new Bitcoin-based assets has declined in recent weeks, along with lackluster price action in the broader cryptocurrency market.

Bitcoin deviates from many post-halving expectations

Unlike previous halving cycles, BTC reached a new all-time high of $73,750 in mid-March prior to the halving. Many expected further price increases after the halving, but things deviated from expectations.

The cryptocurrency market witnessed a notable price decline last week, with Bitcoin leading the downtrend and altcoins following closely behind.

As of 5:35 a.m. EST on May 1, Bitcoin trades to $57,272, reflecting a decline of 7.41% over the past 24 hours. Bitcoin is now down more than 22% from its March 14 ATH of $73,750.

Also, Hashrate Index data revealed that the price of Bitcoin hash fell to an all-time low of $46.55, a 74% drop from the post-halving peak. In context, the hash price is the estimated daily value of each tetrahash of hashing power.

With mining revenue declining, market data provider The Bitcoin Layer says miners face a greater risk of capitulation. If the price of Bitcoin continues to fall in the coming weeks, large miners may be forced to liquidate some of their holdings to stay afloat.

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