Declining bitcoin BTC$87,497.82 mining activity is often interpreted as a sign of network stress, reflecting weaker miner profitability, declining hashrate and concerns over the economic sustainability of mining operations. It is commonly assumed to be bad for the bitcoin price.

Digital assets investment firm VanEck, however, argues that periods of falling hashrate — the total computational power being used by miners to secure the bitcoin network and process transactions — has historically functioned as a contrarian indicator, indicating improving price momentum rather than a signal of structural weakness.

This dynamic is emerging as bitcoin trades around $87,000, following a 36% peak-to-trough slide from the October’s all-time high.

Over the past 30 days, bitcoin’s network hashrate recorded its steepest decline since April 2024, as miners faced compressed margins from a weaker BTC price and that month’s “halving,” an event that cuts block rewards by 50% roughly every four years, reducing new bitcoin issuance.

VanEck notes that the shrinking hashrate when bitcoin prices fall reflects miner capitulation, with inefficient or highly leveraged operators shutting down or selling bitcoin, which contributes to sell-side spot pressure.

In reality, hashrate declines tend to lag behind the price drops. According to VanEck, the timing has historically placed the market closer to cyclical bottoms than tops. As higher-cost miners exit, lower difficulty adjustments occur, making it easier to mine bitcoin and ensuring blocks are produced at a consistent pace. The resulting improved miner profitability then eases forced selling.

The current price correction appears selective, VanEck noted, with shutdowns concentrated among higher cost or geopolitcially exposed operations.

VanEck found that when the 90-day hashrate growth has been negative, bitcoin has delivered positive 180-day forward returns 77% of the time, meaning the price performance over the following six months is high than average than during periods of rising hashrate.

The firm estimated that buying bitcoin during sustained hashrate corrections has improved 180-day forward returns by roughly 2,400 basis points, reinforcing miner capitulation as one of bitcoin more durable contrarian signals.