Bitcoin is showing a prolonged miner capitulation signal, but this cycle is not lining up with the usual market pattern. Publicly traded mining stocks are rallying even as BTC has taken heavy losses.
In an article written by Matt Crosby and translated by Baihua Blockchain, PANews said the network hash rate has been trending lower for months, while mining difficulty has recorded one of the steepest declines on record. In a typical downturn, that points to miners shutting machines off because the economics no longer work. This time, the difference is that listed miners are going through one of their strongest stretches in years while Bitcoin itself has been hit hard.
Hash rate and difficulty are both moving lower
The article said few periods in Bitcoin’s history have seen a longer hash-rate drawdown than the current one. Mining difficulty has been falling as well, which reflects the protocol working as intended: every 2,016 blocks, or roughly every two weeks, the network resets its difficulty target so block production stays close to one block every 10 minutes. When fewer machines are contributing hash power, the target difficulty drops.
Miner difficulty is now down 19.9% from its peak. Since ASIC hardware replaced GPUs as the standard for bitcoin mining, only two drawdowns have been deeper.
Bitcoin’s network hash rate has also been falling for 287 consecutive days, the article said. Only a small number of comparable periods lasted this long. The deeper of those previous episodes came after China’s sweeping crackdown on bitcoin mining. In that case, the chain of events was easier to follow: policy forced machines offline, hash rate dropped abruptly, and those rigs later sought cheaper power and reconnected elsewhere.
Why mining stocks are rising instead
Over the past year, BTC has fallen about 46%. Over the same stretch, several of the largest listed miners have posted sharp gains, with the strongest performer up more than 430%. The article said that is not how this group of assets usually trades.
Historically, mining equities have often been treated as leveraged bitcoin exposure. In down markets, they usually fall harder than BTC. In rising markets, they tend to climb faster. A divergence this large is rare.
The article points to the AI narrative as the main force behind the move. For years, bitcoin and the largest AI ETF moved in the same direction, with correlation reaching 0.8 to 0.9 at certain stages. That relationship has now reversed, with AI continuing to rise while bitcoin weakens.
Block subsidy income is getting thinner
Miners have recently recorded the lowest single-day block reward income on record when measured in BTC, according to the article. Part of that reflects the hash-rate decline, because blocks can come in slower than 10 minutes before difficulty adjustment catches up. The larger reason, though, is simply that the protocol is functioning according to schedule.
The block subsidy is cut in half every four years and will keep shrinking until no new coins are issued.
Since the first halving, the same counterargument has appeared in every cycle: price appreciation will offset the reduction in subsidy. In other words, each block may produce fewer coins, but if each coin is worth more in dollar terms, miner revenue can still hold up. The article said that logic has worked so far.
The Puell Multiple, a measure often used to track miner revenue conditions, is now around 0.75. That means miners are earning roughly three-quarters of their average revenue over the past year. The article translates that into about $30 million in daily revenue today, compared with a longer-term average near $40 million.
Fees still do not cover the security budget
Transaction fees have always been the other answer. One day, the article said, block subsidies will go to zero, and the network’s security budget will have to be supported by fees alone. If that does not happen, the security budget would shrink along with the subsidy.
That point is still far off based on current numbers. Miners are making about $30 million a day right now, and only about $200,000 of that comes from fees. Put differently, average fee income over the past 28 days does not even cover a single block subsidy, while the Bitcoin network produces about 144 blocks a day.
No matter how the fee market develops over time, the article said that at current levels it covers only about 10 minutes of the network security budget.
This capitulation cycle looks different
The article ends by saying Bitcoin is nowhere near a direct security crisis today, and it is not making a price call. But the shape of this miner capitulation cycle is clearly different from several previous ones. Miners have found a hardware use case that is more profitable than mining, and that shift is happening while BTC is falling, block subsidies are shrinking, and fee income is showing little improvement.
The piece adds that bear markets are usually when the harder problems get serious attention. Over the long run, miner incentives will either need to be intentionally designed and repaired, or the system will keep relying on a higher bitcoin price to mask the issue for a while longer.