After reaching a fresh record peak of $109k nearly 3 weeks back, Bitcoin [BTC] has witnessed an approximate 11.28% decline in its value.
This downturn has not only impacted short-term investors in terms of profits but has also put pressure on miners. The recent dip in BTC’s price has caused challenges for miners to cope with the evolving market conditions.
As noted by analyst Frost from CryptoQuant, miners are currently facing significantly low rewards, which could lead to potential capitulation.
Bitcoin’s Miner Profit/Loss Enters a Zone of Extreme Underpayment
According to CryptoQuant data, the sustainability of Bitcoin miners’ profit-loss has now entered a phase of extreme underpayment.
This situation follows the halving in April 2024, which resulted in an increase in mining difficulty. Despite the growing mining challenges, Bitcoin’s hash rate has continued to rise, indicating intensified competition among miners.
With Bitcoin’s price steadily dropping post its all-time high, miners’ profits have been decreasing. At the same time, the actual mining costs have remained relatively high compared to the previous difficulty adjustment.
This current market scenario suggests that miners may soon reach a point of surrender. In historical contexts, when miner profit margins turn negative, it often triggers a positive price response in the mid-term. Essentially, miners tend to sell off Bitcoins to cover their operational expenses.
As miners engage in selling activities, the flow of Bitcoins from miners to exchanges has surged to record levels, suggesting a significant wave of sales by miners at present.
This can also be observed in the shift of miners’ netflow from negative to positive after being negative for 5 consecutive days, indicating an increased movement of BTC tokens from miners to exchanges for selling.
Facing operational challenges, miners are resorting to selling their holdings, with some potentially being compelled into temporary surrender.
In past cycles, such situations have created accumulation opportunities for other market participants to re-enter the market.
Is Miner Capitulation Imminent for BTC?
Therefore, with miners’ profitability dwindling, it becomes crucial to assess the likelihood of miner capitulation in the near future.
For instance, examining the Puell multiple – This metric has consistently remained above 1 since January 13, dropping below 1 only twice in 2025, both times during the initial weeks of the year. This indicates that despite fluctuations, the revenue for miners remains relatively stable.
Hence, as long as the Puell multiple stays above 1, the chances of miners giving up are lower. This could suggest that the current drop is more of a healthy adjustment rather than a sign of weakness, possibly paving the way for accumulation by robust miners and investors.
What Lies Ahead?
As per CryptoCrypto’s analysis, for Bitcoin miners to avoid capitulation, BTC’s price must see a recovery to enhance miner profit margins.
If the price continues its downward trajectory, similar to the trend of the past week, miner capitulation could be on the horizon. Therefore, for sustainable mining operations, Bitcoin needs to reclaim and sustain a value above $100k.