Latest / The Cryptocurrency Economy with Fexingo: Bitcoin, Ethereum, and Digital Money Markets / Why Bitcoin Hashribbon Signal Flashed a Mining Capitulation
Transcript
- Lucas: Bitcoin's hashprice — the revenue miners earn per unit of hashing power — hit an all-time low on July 8th. That's a record in dollar terms, and it triggered the Hashribbon capitulation signal for the first time since December 2022. Luna: The Hashribbon. For listeners who aren't mining nerds — that's when the 30-day moving average of hashrate crosses below the 60-day average, right? Usually signals miners are shutting off machines. Lucas: Exactly. And the last time that happened, Bitcoin was trading around $17,000. It marked the local bottom before the 2023 rally. Fast forward to now — we're at $64,668, but hashprice is actually lower than it was back then. That's the weird part. Lucas: If walking through the economics of mining with us has made something click — we're listener-supported, no ads, no sponsors. A small group of listeners chips in monthly through buy me a coffee dot com slash fexingo, and it's literally what keeps this show going. Luna: Yeah, it's a tiny thing that makes a huge difference. We don't have to sell your attention to anyone. Lucas: Right. So back to the hashprice — it's fallen because of a simple math problem. Bitcoin's price hasn't kept up with the massive increase in hashrate. The network's computing power hit an all-time high in June, above 700 exahashes. But BTC is down about 12 percent from its March peak. So each hash earns less. Luna: And the fourth halving in 2024 cut block rewards from 6.25 to 3.125 BTC. That compressed revenue further. So miners are earning half the bitcoin per block, and each bitcoin is worth less than it was a year ago. That's a double squeeze. Lucas: Double squeeze is the right phrase. Hashprice is a function of three things: the BTC price, the block subsidy, and the transaction fees. All else equal, if price drops or subsidy drops, hashprice drops. But what's interesting is that transaction fees have actually been decent — thanks to Ordinals inscriptions and Runes. They've added maybe 10 to 20 percent to miner revenue on some days. But it's not enough to offset the halving. Lucas: So what does the Hashribbon signal actually tell us? Historically, it's a buy signal. The idea is that when weak miners capitulate — they sell their coins to cover electricity costs, they unplug inefficient rigs — the hashrate drops. Difficulty adjusts downward in the next two weeks. The surviving miners have less competition, their margins improve, and the selling pressure from distressed miners fades. That sets the stage for a price recovery. Luna: But it's not a guarantee. In 2018, the Hashribbon flashed multiple times during the bear market. Each time was a local bottom, but the overall trend was still down. So it's more of a timing tool within a cycle, not a 'buy and forget' signal. Lucas: Right. And the context matters a lot now. In December 2022, the Hashribbon flashed after FTX collapsed. Mining was in crisis — many public miners were bankrupt or near bankruptcy. Core Scientific filed for Chapter 11. Compute North went under. The signal worked because the entire industry had been purged. Today, the mining landscape is different. Most of the big public miners — Marathon, Riot, CleanSpark — they've refinanced, they've upgraded to more efficient rigs. They're not as leveraged. Luna: But they're still sensitive to hashprice. I saw a note from JPMorgan last week estimating that the average all-in cost to mine one bitcoin for public miners is around $45,000. At $64,668, they're still profitable, but margins are thinner than a year ago when BTC was over $70,000. Lucas: Exactly. And that's where the capitulation comes in. The weakest miners — typically private miners with older generation S19 rigs or higher electricity costs — those are the ones turning off machines. We can see it in the data. Glassnode's miner outflow metric spiked 15 percent in the two weeks ending July 15. That's the largest spike since May 2025. Those are coins moving to exchanges. Luna: So that selling pressure is real. But here's a counterpoint: the Hashribbon has been back-tested extensively. According to Capriole Investments, the four previous signals from 2015 to 2022 produced an average return of 70 percent over the following six months. That's a strong track record. Lucas: It is. But we have to acknowledge that the market structure has changed. Back then, mining was more retail. Now it's institutional. Publicly traded miners account for about 25 percent of hashrate. They have more access to capital, they can hedge, they can raise equity. So the forced selling might be less extreme. Lucas: Also, the Hashribbon only works if the difficulty adjustment actually relieves pressure. The next difficulty adjustment is scheduled for July 24. Estimates suggest a downward adjustment of about 3 to 5 percent. That's meaningful, but it's a far cry from the double-digit drops we saw after the 2022 capitulation. Luna: So it's a milder version of the signal this time. Which could mean a milder price response. Or it could mean the signal is less relevant in a more mature market. Lucas: I think it's still relevant, but you have to pair it with other on-chain data. Look at the Puell Multiple — it's at 0.6, which is historically in the 'undervalued' zone. The MVRV Z-Score is at 1.2, which is below the historical tops. Multiple metrics are flashing similar messages. But again, none are guarantees. Luna: And there's the macro backdrop. The Fed has kept rates at 3.63 percent since June. Dallas Fed President Logan just called for 'modestly' higher rates. That's a headwind for all risk assets, including Bitcoin. If rates go up, hashprice faces even more pressure because the opportunity cost of holding BTC increases. Lucas: Right. So the Hashribbon is a mining-specific signal, but it doesn't exist in a vacuum. If the macro environment turns more restrictive, even if miners capitulate, the price might not rally in the same way it did in 2023. Lucas: What I find most interesting is the behavioral angle. The Hashribbon signal is well-known among crypto natives. When it flashes, retail tends to pile in, expecting a repeat of history. But if institutional miners are more resilient, the supply squeeze might not materialize as strongly. So the trade gets front-run. Luna: You're saying the signal might have lost some of its edge because everyone knows about it. Lucas: Partly. But also because the mechanics have changed. In 2022, when miners capitulated, they sold most of their reserves. Today, many miners are hodling more — they've adopted 'HODL' strategies, taking on debt rather than selling coins. So the capitulation might show up in balance sheets rather than in exchange inflows. Luna: That's a key distinction. So the Hashribbon might flash, but the actual selling could be muted. That would make the signal less predictive of a bottom. Lucas: Exactly. We need to watch miner debt levels, not just hashrate. If a miner defaults on a loan rather than selling coins, the Hashribbon might not capture that stress. It's a lagging indicator of distress, not a leading one. Luna: So for a listener trying to make sense of this — is the Hashribbon something they should act on? Lucas: I think it's a useful piece of the puzzle, but not the whole picture. If you're a long-term investor, it's a good time to dollar-cost average into Bitcoin, given the multiple undervaluation signals. But don't bet the farm on a single indicator. Pair it with the Puell Multiple, the MVRV Z-Score, and keep an eye on macro. Lucas: And for traders, the Hashribbon has historically produced quick gains. But the drawdowns can be brutal if the signal fails. The 2018 repeat saw an initial bounce that reversed within weeks. Luna: So the takeaway is: the Hashribbon flashed, it's worth paying attention, but it's not a magic signal. Miners are capitulating, but the institutional structure might soften the blow. Lucas: Right. And we'll know more in two weeks when the difficulty adjustment kicks in. If we see a larger than expected drop — say 8 percent or more — that would suggest more severe capitulation. That's when the Hashribbon's predictive power increases. Luna: And if the adjustment is mild, then the market might need another leg down to shake out the weak hands. Lucas: Exactly. So watch the July 24 adjustment. That's the next real data point. Until then, the Hashribbon is a yellow flag, not a green light.