It is always interesting to evaluate Bitcoin mining activity, especially in relation to price and broader market dynamics.
After all, miners are the group who receive freshly minted coins as the blockchain continues to grow. Because their revenue is paid in the network’s native currency, their behavior can be revealing.
Right now, something notable is happening: the hash rate — the total computational power dedicated to the Bitcoin network, and a proxy for miner participation — is rising. And it’s rising substantially.
At the same time, the price is falling.
The hash rate has been setting successive record highs, while the price collapsed and has traded sideways in the low-$20,000 range for several months.
That divergence is unusual. As the chart above shows, during the last major crash in May 2021 the hash rate fell as well. That response makes sense — miners earn in Bitcoin, so should adjust activity when price plunges. Why, then, does hash rate remain elevated and network difficulty stay high?
Most observers view rising hash rate positively: higher hash rate generally means a more secure network, and stronger network security is usually framed as bullish for Bitcoin’s long-term health.
But does that conclusion hold up economically? Are miners holding back sales, or are they being forced to sell more than usual? After the recent crash, miner selling appears subdued rather than elevated. Some have pointed to the September transition of Ethereum to proof-of-stake as a factor that redirected miners toward Bitcoin, but the timing does not line up exactly.
Let’s examine whether miners are selling. The following chart from Arcane Research is instructive:
Following the summer capitulation, miner selling has not surged. Could that change quickly?
I recently suggested Bitcoin might be “one event away from a world of pain.” Looking at fundamental mining data makes me nervous again. This is not a definitive conclusion but rather a concern based on observation. It’s worth reviewing a prior episode when hash rate increased even as price fell.
That pattern occurred in mid-2018 — and it did not end well.
Zooming into that period gives a clearer view, since the broader chart can be busy. A close look at the 2018 window shows the same phenomenon: hash rate pumped higher even as price declined. The later months of 2018 then saw a further deterioration in price.
It’s a concerning precedent, and some analysts treat it as a bearish signal. That said, I’m cautious about simply extrapolating past Bitcoin cycles to the present.
Yes, the pattern did occur in 2018. But Bitcoin then was much less known — many people hadn’t even heard of it. It was still a niche asset and didn’t attract the attention of traditional finance. The macroeconomic environment today is also markedly different, with a new interest-rate paradigm that can’t be overlooked. Importantly, not every cycle in Bitcoin’s history unfolded in the middle of a broad economic downturn.
Still, this is not merely a case of “this has happened before.” I find it puzzling that miner selling hasn’t been higher and that hash rate has been so aggressively increasing. Why are miners continuing to add and run power when price has been under pressure?
In short, this metric alone isn’t a reason for me to hit the SELL button. I prefer to combine mining data with broader analysis, and to me this divergence is a curious datapoint. As I wrote last week, the sideways action around the $20,000 level is concerning; it’s a psychologically important area, and a decisive break lower could encounter little support.
The broader market contains too many variables that can quickly turn negative, and Bitcoin has not clearly capitulated since the summer contagion. Equities have actually weakened. Under those conditions, resilient or even rising mining activity does not eliminate worries about future price pressure — it simply adds an intriguing, and potentially unsettling, layer to the overall picture.