Bitcoin Miners Face Profitability Crisis Amid Price Drop

Bitcoin's recent price decline has raised concerns about the sustainability of miners' profitability, potentially leading to capitulation. Since hitting an all-time high of $109k nearly three weeks ago, Bitcoin has dropped by approximately 11.28% on the charts. This decline has not only affected short-term holders but also miners, who are now struggling to keep up with the market.

CryptoQuant analyst Frost observed that miners are currently in an extremely underpaid situation, risking miners' capitulation. According to CryptoQuant, Bitcoin miners' profit-loss sustainability has entered the extremely underpaid zone. This follows the April 2024 halving, which resulted in a rising mining difficulty. While the hash rate has continued to grow, indicating increased competition among miners, Bitcoin's price decline has led to shrinking returns for miners. In contrast, the realized mining cost has been relatively high compared to the last difficulty bottom.

These market conditions suggest that miners might start to capitulate soon. Historically, when miner profit/loss profitability turns negative, it is often followed by a mid-term positive price reaction, as miners sell Bitcoin to cover costs. This is evident in the record levels of miner-to-exchange flows and the positive netflow total after being negative for five consecutive days. Miners facing operational difficulties have responded by selling, with some potentially forced to capitulate temporarily.

However, it is essential to determine if miner capitulation is ahead. The Puell multiple, a metric that has remained above 1 since 13 January, dropping below 1 only twice in 2025, suggests that miner revenue remains moderately healthy. As long as the Puell multiple remains above 1, miners are less likely to capitulate, and the drop could be a healthy correction instead of weakness, implying accumulation by strong miners and investors.

For Bitcoin miners to avoid capitulation, the price must recover to increase miner profit/loss. If the price continues to fall, miners' capitulation could be next. Therefore, Bitcoin must reclaim and hold above $100k for miners' sustainability goals to be achieved.