Bitcoin Computing Power big dump 4%! Will the Miner shutdown wave be a signal for the crypto market to hit the bottom?

VanEck, a global asset management giant, revealed in its latest report that the Bitcoin network's Computing Power has dropped approximately 4% in the past 30 days, marking the sharpest fall since April 2024. This phenomenon is typically associated with Miners being forced to shut down or scale back due to profit pressures. Historical data shows that periods of weak Computing Power often do not signal the beginning of deeper falls; rather, they are precursors to market bottoming and Rebounds. Meanwhile, despite the short-term price pressure, corporate treasuries have quietly increased their holdings, accumulating 42,000 Bitcoins from mid-November to mid-December, the largest monthly accumulation since July. The current market exhibits classic bottoming characteristics, with Miners under pressure and short-term holders dumping, while long-term holders and institutions remain “unmoved.”

Computing Power Plummets: Insights from Miners' “Stress Test” and Historical Rebound

The Computing Power of the Bitcoin network, which refers to the total computing capacity used for mining across the entire network, has recently experienced a significant pullback that cannot be ignored. According to a report by VanEck, the computing power has decreased by approximately 4% over the past month, marking the largest drop since April 2024. The decline in computing power directly reflects the deterioration of the Miner operating environment. Data shows that the breakeven electricity cost for a 2022 model S19 XP miner has dropped from $0.12 per kilowatt-hour in December 2024 to about $0.077 this month. Meanwhile, the network's daily transaction fee revenue has decreased by 14% month-on-month, and the growth of new addresses has also slowed by 1%. These factors have collectively squeezed miners' profit margins, leading to some inefficient mining machines being forced to shut down, thereby reducing the overall network computing power.

This Computing Power pullback is not accidental; it often coincides with periods of price stagnation and is influenced by external regulatory events. Reports indicate that approximately 1.3 GW of mining capacity in China's Xinjiang region has been shut down due to policy reviews, which may have removed nearly 10% of global Computing Power, equivalent to about 400,000 Miners going offline. VanEck emphasized in its report that historical data suggests a decline in Computing Power typically signals a depletion of market selling pressure rather than the onset of a new round of dumping. Since 2014, when the 90-day growth in Computing Power turns negative, Bitcoin has had a 77% probability of positive returns in the following 180 days, with an average increase of 72%. In contrast, during other periods, the average return rate is around 48%. This statistical pattern injects a dose of historical experience as a tonic into the currently seemingly weak market.

Current miner pressure and key market signal data

• Computing Power Change: Decreased 4% in the past 30 days, marking the largest fall since April 2024.
• Miner Economy: The breakeven electricity cost for the S19 XP Miner has decreased from 0.12 USD/kWh to 0.077 USD/kWh; the daily network transaction fee income has decreased by 14% month-over-month.
• External Impact: Approximately 1.3 GW of miners in the Xinjiang region have halted operations, which may affect 10% of global Computing Power.
• Historical Patterns: After a negative growth in Computing Power, the probability of Bitcoin's 180-day positive return is 77%, with an average increase of 72%.

Therefore, the current fall in Computing Power is more like a “stress test” for the industry, eliminating high-cost outdated capacity, thereby allowing the entire network to operate on a healthier basis. For the market, this often serves as a reverse investment observation signal, suggesting that the passive dumping led by the bottom-tier suppliers (Miners) may be nearing its end.

Market Headwinds: How Gold and AI Divert Crypto Funds?

Despite on-chain data beginning to show positive signals, Bitcoin still faces severe external competition and capital diversion in the short-term price performance. Recently, the price of traditional safe-haven asset gold soared to a historic high of $4,475 per ounce, with silver closely following. This frenzy for “substantive assets” is directly challenging Bitcoin's narrative as “digital gold.” Analysts at ByteTree have pointed out that the long-term returns of silver have started to compete with Bitcoin, marking a significant shift in the mindset of precious metal advocates. Funds are clearly flowing towards physical precious metals, seen as a “anti-devaluation trade,” seeking traditional security during times of geopolitical uncertainty.

Meanwhile, another wave of strong capital is flowing into artificial intelligence related infrastructure and stocks. Tech giants are spending heavily to acquire energy infrastructure to ensure data center capacity, and this trend is even directly benefiting publicly-listed crypto mining companies transitioning to high-performance computing. For example, Hut 8's stock price rose more than 17% in a single day after signing a significant data center lease. This reveals a key trend: some mining companies' capital is seeking more stable and mainstream capital market-favored profit scenarios outside of cryptocurrency mining. This successful “cross-border” move, in turn, poses a challenge to the investment logic of pure mining businesses.

In addition, the short-term pressure from the derivatives market cannot be underestimated. This week, approximately 27.4 billion USD worth of Bitcoin and Ethereum options are set to expire at the Deribit exchange. Such a large volume of contract settlements typically intensifies market volatility and uncertainty before the expiration date, causing traders to be cautious, which in turn suppresses the momentum for unilateral breakthroughs in the spot market. A combination of multiple factors has led to the current situation where Bitcoin finds itself in a “narrow gap”: it has neither been able to attract enough traditional safe-haven funds nor has it been able to maintain its growth narrative, as it has temporarily lost the spotlight to hot topics like AI, resulting in a lack of strong catalysts in the short term.

Position Differentiation: Corporate “Greed” vs. Long-term Holders' “Calmness”

Beneath the calm surface price and adjustments in Computing Power, profound holder structure changes are occurring on the Bitcoin blockchain, which may be the true underlying support for the market. A stark contrast is evident: despite a slight decline of 120 basis points to 1.308 million coins in the holdings of spot Bitcoin ETP, corporate treasuries are making large purchases. From mid-November to mid-December, publicly disclosed digital asset treasuries cumulatively increased their holdings by 42,000 Bitcoins, bringing their total holdings to 1.09 million coins, the strongest monthly accumulation since July. Among these, industry leader Strategy alone increased its holdings by 29,400 coins. More notably, these companies are shifting from issuing common stock to issuing preferred stock and other more structured financing tools to raise funds, demonstrating that their strategic commitment to long-term Bitcoin allocation has not been shaken by price fluctuations.

On-chain data further illustrates the behavioral divergence among different holder groups. The VanEck report indicates a significant decrease in the balance of coins held for 1 to 5 years, with the balance of the group holding for 2 to 3 years plummeting by 12.5%. This group of investors typically bought in during the later stages of the previous cycle, and their selling represents the exit of “weak hands” under prolonged sideways movement and negative news. In stark contrast, the balance of Bitcoin held for more than 5 years remains almost unchanged, stabilizing or even slightly increasing. This group, known as “diamond hands,” consists of long-term believers whose holdings form the strongest foundation of the market.

This differentiation clearly outlines a classic market bottoming scenario: short-term speculators and holders lacking confidence are being shaken out, while the most steadfast long-term holders and strategically-minded institutions are quietly stepping in. The adjustment of miners' Computing Power has reduced the pressure of new supply, and continuous purchases by enterprises have created stable demand. When the market completes this round of “handovers” and floating supply is cleared, the resistance to price increases will naturally diminish.

Market Outlook: Waiting for Directional Choice After Pressure is Cleared

Overall, the current Bitcoin market is in a complex intertwining period of bullish and bearish factors. The negative factors are evident: the decline in Computing Power reflects short-term pressure on Miners, competition for market attention and funds between gold and AI, volatility risks brought by options expiration, and the dumping by some medium-term holders. However, the positive on-chain signals are also clear: history shows a high probability of price increase after Computing Power adjustments, corporate treasury is accumulating at the fastest pace in nearly six months, and the chips of long-term holders are extremely stable.

For investors, the current stage may require greater attention to the quality of signals rather than short-term noise. The market seems to be repeating a familiar script from past cycles: after experiencing a period of decline, it completes the bottoming process through Computing Power adjustments, the clearing of leverage, and the exit of weak hands. VanEck's view also leans towards believing that the current pressures are more like setting the stage for a more robust price trend in the coming months.

Looking ahead, the market needs a new catalyst to break the balance. This could come from a macro level, such as further clarification of the Federal Reserve's monetary policy path; or it could come from within the industry, such as a net inflow of funds returning to the US spot Bitcoin ETF, or a breakthrough in important regulatory legislation. In addition, after the mining industry completes its capacity clearance, a healthier industry structure will also lay the foundation for the network.

In terms of operation, for long-term investors, the current “value range” outlined by corporate treasury and long-term holders is worth paying attention to. For short-term traders, however, it is necessary to be wary of additional volatility triggered by events such as option expirations. In any case, the Bitcoin network has once again passed the “stress test” led by market mechanisms, and its underlying resilience and long-term narrative remain intact. When the noise of external capital rotation subsides, the market's focus will ultimately return to its essential narrative of value storage and growth.