Why Bitcoin Miner Capitulation Has Concluded For This Cycle

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Every crypto bear market has seen Bitcoin miner operations capitulating to stay financially afloat. This capitulation often marks a bottom for BTC and the crypto market, allowing it to consolidate before breaking into new highs. 

However, the current Crypto Winter could be unlike others regarding selling pressure from Bitcoin miner operations. These entities have been selling their BTCs less intensively than in previous years, hinting at sector maturation and growth in the nascent industry. 

BTC’s price displays bullish momentum on the daily chart. Source: BTCUSDT Tradingview

Bitcoin Miner Operations Are Enduring The Bear Market

According to an Arcane Research report, the Bitcoin network continues to increase its hashrate. This data suggests that more and more Bitcoin miner operatives are joining the blockchain despite the downside pressure in the market. 

The firm claims that the increment in BTC’s hashrate has become predictable, unlike in 2018. At that time, the Bitcoin price fell from an all-time high of $20,000. The industry was young and supported mainly by new miners entering the space for the first time. 

In the 2017 bull run, the Bitcoin hashrate saw a 300% spike in its hashrate. This increase was most likely caused by a craze in short-term speculators looking to become Bitcoin miners and collect block rewards. The price of BTC rose by over 200% in less than a year, as seen in the chart below. 

Bitcoin miner BTC BTCUSDT chart 1
Source: Arcane Research

In the 2022 Crypto Winter, after Bitcoin underwent its most significant rally in value growth, the Bitcoin network hashrate has increased by just 30% so far. Arcane Research noted the following, providing a bullish case for the digital assets and their investors: 

We’ve already experience a miner capitulation. This summer, miners sold way more BTC than what they generated, drawing down on their investories. Selling more than they produced in what marked the capitulation in 2018.

Miners Keep Betting On BTC’s Long-Term Success

In addition to a predictable increase in the hashrate, without the 2017 crypto craze for BTC, the network’s main hurdle is the current macroeconomic landscape. In 2018, the network faced internal disputes between different factions. This political conflict is known as the “Block Size Wars” or “Block Space Wars.” 

The “Crypto Winter” impact on Bitcoin miner operations is decreasing, in contrast to previous years. Arcane Research claims these entities are navigating effectively through current market conditions and showing “signs of improving.” 

BTC public mining companies in the U.S. are expanding their BTC inventories. These companies reduced the percentage of their BTC production sold into the market. 

Bitcoin miner BTC BTCUSDT
Source: Arcane Research

Public Bitcoin miners sold 68% of their total production in September 2022. In contrast, these companies sold 350% of their BTC supply in June. At that time, Bitcoin miners’ capitulation peaked, leaving space for the cryptocurrency to form a bottom. Arcane Research noted: 

Miners spent the summer improving their debt situation. We’ve seen mining companies restructuring their debts and bolstering their balance sheets, most notably with Stronghold slashing its debts by more than 60% in August. The market is current less exposed to massive selling pressure from public miners.

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