Bitcoin miners have been struggling lately—though past data shows that could be a bullish signal for Bitcoin’s price.

Since its peak in late May, Bitcoin’s total hash rate has declined from 658 exahashes per second (EH/s) to 556 EH/s on June 28, according to Hashrate Index. Hash rate is a measure of the total effort being used by miners to secure the Bitcoin network, and is by extension a measure of how competitive it is to mine.

In response, the Bitcoin network has automatically adjusted its block-mining difficulty down 7.8% this weekend from 83.68 terahashes per second (TH/s) to 79.50 TH/s.

Drops of that size are few and far between in Bitcoin’s history. In fact, the last time a pullback in both hash rate and network difficulty of this magnitude occurred was after the collapse of FTX in December 2022—a period when multiple major mining companies defaulted on their debts, and Bitcoin’s price finally bottomed after a year-long bear market.

“Miner capitulation is still ongoing,” tweeted CryptoQuant CEO Ki Young Ju on Tuesday. “Historically, it ends when the daily average mined value is 40% of the yearly average; it’s now at 72%.”

In a report last week, CryptoQuant noted that “miner capitulation” has in the past been associated with a bottom in Bitcoin prices. That means a careful observation of miner health could be key for traders looking to enter the market at the right time.

Since miners earn their revenue in BTC, their income is largely dependent on the market price of Bitcoin itself. As such, Bitcoin’s substantial price pullback since March has crunched the mining industry’s income at large.

The main pain point for miners, however, has been April’s Bitcoin halving.

“Bitcoin miner reserves decreased by roughly 20k BTC since June,” Vincent Maliepaard, marketing director at IntoTheBlock, told Decrypt. “The Bitcoin halving two months ago might be a driver behind the recent miner sell-off as margins have decreased since then.”

Over the last three months, Bitcoin’s “hashprice”—a measure of mining industry profitability per unit of mining work performed—has plummeted to all-time lows.

According to Compass Mining, periods of such depressed profitability generally continue for 6 to 12 months after a halving event. Such periods make a good time for mining companies to upgrade their computer fleets to use the most efficient mining hardware available.

“Large public miners are still actively purchasing the latest generation miners to drive fleet efficiency, economies of scale, gross margin, and ultimately their stock price,” said CJ Burnett, chief revenue officer at Compass Mining, to Decrypt.

Edited by Ryan Ozawa.