Bitcoin miners have been forced to sell off their bitcoins as a plunge in prices, rising energy costs and increased competition bite into profitability.
The number of coins that miners are sending to crypto exchanges has been steadily climbing since June 7.
This may be translated as miners are liquidating thier coins to avoid more severe winter or stop lasting losses.
Several publicly listed bitcoin miners collectively sold more than 100% of their entire output in May as the value of bitcoin declined by over 45%.
"The plummeting profitability of mining forced these miners to increase their selling rate to more than 100% of their output in May. The conditions have worsened in June, meaning they are likely selling even more,"
Jaran Mellerud, Arcane analyst
Bitcoin miners collectively own around 800,000 bitcoins, according to CoinMetrics data.
Strong Pressure on Miners
The crypto mining space rapidly expanded in 2021 as bitcoin more than quadrupled in value, but this growth has further pressured margins as the process is designed to grow more difficult as the number of miners increases.
High energy prices are also hitting miners.
Some miners, including Bitfarms, are using proceeds to negotiate financing agreements to fund operations and make payments on expensive mining equipment.
If miners have already paid two-thirds or even 70% of the price of these millions of dollars in machines, they wouldn't want to miss the final installments, which makes them desperate for financing, Brendler said.
Regarding the huge amount of BTC holding of miners, BTC Price may be strongly pressured downward if they start to sell off.
WEN the Bottom
"Bitcoin mining is a zero-sum game. If you can continue running when others cannot that means you have a larger share of the pie,"
Charlie Schumacher,r Marathon Digital Holdings Inc
Nobody exactly know when the bottom of cryptocurrency comes.
Based on past experience, after miner capitulation, we could see the small light of hope in tthe dark and severe winter.
Source: Reuters