Bitcoin miner capitulation due to end amid first difficulty increase since June

Bitcoin miner capitulation due to end amid first difficulty increase since June
Bitcoin miner capitulation due to end amid first difficulty increase since June

Bitcoin (BTC) miners have been capitulating for nearly two months, but an end to the squeeze may already be here.

That was the conclusion of Blockchain infrastructure and cryptocurrency mining firm Blockware when it published its latest Intelligence Newsletter on July 29.

Report: “Expect” capitulation to be made by September

The latest edition of the market research series highlighted changes in the mining ecosystem that are apt to reverse a trend in place since early June.

Miners, judging by the hashband metric, have retired for an “extended period,” says Blockware, and as of August 1st, hashbands have signaled capitulation for 55 days.

“The current miner capitulation began on June 7, 2022, and has lasted for a considerable time. It is important to note that miner surrenders are particularly relevant because it reveals that a large number of machines are no longer hashing,” the firm wrote:

“Since June 7th, other new generation mining rigs have likely been plugged in by both public and private mining companies. However, enough old generation machines or inefficient survival miners have shut down that hashrate and difficulty have actually decreased in size.”

Bitcoin hash band chart. Source: LookIntoBitcoin

The upheaval reflects the obstacles to profitability caused by the decline in the price of Bitcoin, which hit $17,600 in June – sending the market back into late 2020.

As signs – albeit disputed – appear that price strength is on the way back, so that the chances of better conditions for miners are improving. According to Blockware, the capitulation, as defined by hash tape, should be over before the summer.

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“If there are no new lows in Bitcoin, we should expect the miner capitulation to end in August or September at the latest,” the newsletter added.

Difficulties due to breaking down several months of downtrend

As for miners’ return to form, early signals are already visible on-chain, thanks to the automated adjustments in Bitcoin’s network foundation.

Related: Will the Bitcoin Mining Industry Collapse? Analysts explain why crisis is really opportunity

Specifically, mining woes are due for the first increase in two months on August 4 after three straight downgrades in a row.

“Currently, it is projected to be positive and is highly likely to persist,” Blockware summarized.

The increase, if the current spot price level also persists, will be modest at around 0.5%. In comparison, the previous drop in difficulty was -5%.

Basic overview of the Bitcoin network (screenshot). Source: BTC.com

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