With the hash rate recovering and the difficulty reaching a new all-time high in 2023, Bitcoin seems to recover completely from the bear market. Is this the end of miner capitulation, and will this trend contribute to the ongoing price recovery in the crypto market?

Miners are still capitulating

Miner capitulation is a term to describe a strong effect that sets in once a bullish market cycle has ended. During a bear market, miners are forced to sell-off all their BTC to maintain the much-needed liquidity.

Last year was especially hard because energy prices were increasing, which added additional pressure. Some of the biggest miners had to file for chapter 11 bankruptcy, but did not seize all of their operations. This gives reason to believe that selling pressure could continue until these companies are force to stop once and for all.

Another factor is the current relief rally that we are seeing in crypto. With higher prices for Bitcoin, some of the affected businesses are being profitable again. That being said, they are still depended on the current price levels and outstanding loans might still break their back even with the recent price surge.

What does that mean for Bitcoin?

The Bitcoin network is secured by the hash rate that miners are throwing in to compete for solving a computational puzzle to find the next block. Therefore, the higher the hash rate, the more secure is the network.

If an attacker tried to manipulate the blockchain, he would need a significant higher amount of hash power than the rest of the miners. With the current hash rate, it is impossible to achieve that. No single entity could compete with the Bitcoin network in its current state. Even in a situation that would cause a significant drop in hash rate, this calculation doesn’t change.

In effect, it has been impossible to attack Bitcoin for a few years and with each increment in hash rate the very idea becomes even more obscure. But there is also a component to the value of Bitcoin. The hash rate pays testimony to the fact that there are still businesses who are estimating that they can cash in a profit. This is essential fundamental data because only a situation in which miners would refuse to continue their operations as a whole would endanger the network.