Galaxy Research Says Bitcoin Miners Enter Capitulation as Difficulty Drops More Than 20% From Record
Summary
- Galaxy Research said Bitcoin miners have entered a capitulation phase as profitability worsens.
- It said Bitcoin mining difficulty has fallen more than 20% from its all-time high, marking the biggest difficulty adjustment since 2021.
- The market sees miner capitulation as signaling short-term selling pressure, though it could later help improve the mining cost structure.
Bitcoin miners have entered a capitulation phase as weaker profitability pushes some operators off the network, Galaxy Research said.
Crypto-focused media outlet Odaily reported on June 21 that Galaxy Research made the assessment in a post on X, formerly Twitter.
Bitcoin mining difficulty has fallen more than 20% from its all-time high, marking the largest difficulty adjustment since 2021, Galaxy Research wrote.
A decline in mining difficulty is typically interpreted as a sign that competition among miners on the network has eased. When profitability deteriorates, some miners are no longer able to cover electricity and operating costs and shut down their machines. The network then adjusts mining difficulty to match the lower hashrate.
Galaxy Research said the latest drop in difficulty shows some miners are leaving the network under pressure on profitability, indicating the market is in a hashrate readjustment phase.
Market participants view miner capitulation as a signal of weaker Bitcoin network profitability and possible selling pressure in the short term. Once higher-cost miners are forced out, however, the process could help improve the industry's cost structure.
