Bitcoin miners are being forced to turn to their cryptocurrency wallets to fund rising operating costs and minimize the effect of falling asset prices and advancing competition.
The number of coins miners are sending to cryptocurrency exchanges has been steadily increasing since June 7, MacroHive researchers noted, in a sign that “miners are increasingly liquidating their coins in exchanges“.
Several publicly traded bitcoin miners sold all of their production in May, when the value of bitcoin dropped 45%, according to an analysis by Arcane Research.
“The drop in profitability forced these miners to increase their sales rate by more than 100% compared to the previous month. And, conditions worsened in June, which means they are likely driving the rate even higher,” said Jaran Mellerud, an analyst at Arcane.
“Over the past six months, the hash rate and mining difficulty has increased while the price of bitcoin has dropped. Both are negative for miners as they work to squeeze margins [de lucro],” said Joe Burnett, an analyst at bitcoin mining company Blockware Solutions. The hash rate is the computing power needed to confirm a transaction.
High energy prices are also hitting miners, which by some estimates use more electricity than is consumed in the Philippines, for example, according to the Cambridge Bitcoin Electricity Consumption Index.
Bitfarms, Riot Blockchain and Core Scientific are among the companies that have announced sales, with the chief executive of Bitfarms saying the company is “no longer mining bitcoin on a daily basis”.
If miners have already paid off two-thirds or even 70% of their equipment investment, they don’t want to miss the final installments of their financing, which makes them desperate for cash, said Chris Brendler, senior analyst at DA Davidson.
Miner stocks were hit even harder than bitcoin; The Valkyrie Bitcoin Miners ETF is down 59% this quarter compared to bitcoin’s 53% drop.
there is hope
Bitcoin mining difficulty has decreased by 2.35% this week, data from Glassnode showed, indicating that the network has adjusted after some miners shut down their rigs. This took some pressure off those who haven’t given up yet.
“Bitcoin mining is a zero-sum game. If you can keep running when others can’t, that means you have a bigger slice of the pie,” said Charlie Schumacher, a spokesperson for the largest publicly traded miner, Marathon Digital – which has not sold bitcoin since October 2020.
“Bitcoin price floor was reached at the end of the miners capitulation, this could be a sign that miners who can survive this will have light at the end of the tunnel,” said Burnett of Blockware Solutions.
Source: CNN Brasil
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