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Bitcoin Miners Are Selling Again Amid Low Revenues

Published: Jun 17, 2024 | Last Updated: Jun 17, 2024
Howard Kane
Miners selling BTC
Image: Miners selling BTC

Miners face financial pressure with reduced rewards and high operational costs, leading to a surge in Bitcoin sales and impacting market dynamics.

Bitcoin miners are facing challenging times as they increase their selling activity due to declining revenues. This trend follows the recent halving event, which has led to a drop in transaction fees and miner earnings. In this article, we will break down the key factors contributing to this situation and what it means for the broader Bitcoin ecosystem.

Impact of the Halving Event

The halving event is a significant occurrence in the Bitcoin network, where the reward for mining new blocks is cut in half. This event happens approximately every four years and is designed to reduce the rate at which new Bitcoins are created. While it helps control inflation, it also means miners receive fewer Bitcoins for the same amount of work.

Following the recent halving, miners have seen a substantial drop in their revenues. Daily miner revenues have decreased by 55% since March, making it more challenging for miners to cover their operational costs.

Increased Selling Activity

As a result of the reduced revenues, miners have started to sell more of their Bitcoin holdings. According to a report by CryptoQuant, the number of BTC sent from mining entities to exchanges has reached a two-month high. This increased selling activity is partly responsible for the recent 4.5% drop in Bitcoin's price, which reached a monthly low of $65,000.

Large mining companies, such as Marathon Digital, have been notable sellers. In June, Marathon Digital sold 1,400 BTC, which represents 8% of its total holdings. Similarly, significant transactions have been noted from the mining pool to Binance and over-the-counter desks.

Financial Pressure on Miners

The high network hashrate, which measures the computational power used to validate transactions and add blocks to the blockchain, is adding financial pressure on miners. A higher hashrate demands more resources, making it more expensive for miners to operate. Despite the high hashrate, the decrease in transaction fees has further squeezed miner profits.

This combination of reduced block rewards, lower transaction fees, and high operational costs is pushing miners to liquidate their holdings to stay financially viable.

In conclusion, the recent increase in selling activity by Bitcoin miners highlights the financial challenges they face following the halving event. As the market adjusts to these changes, it will be essential to monitor how these factors influence the broader Bitcoin landscape.

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