Bitcoin miners now selling their holdings as bearish market persists

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It looks like the bear­ish mar­ket is hit­ting all sec­tors of the cryp­tocur­ren­cy space, includ­ing those that are charged with the respon­si­bil­i­ty of val­i­dat­ing trans­ac­tions and main­tain­ing the net­work integri­ty of the Bit­coin network.

Data from Com­pass Min­ing reveals that Bit­coin min­ers are sell­ing off their mined tokens as the tum­bling price of bit­coin eras­es prof­it mar­gins for these min­ers. This comes at a time when cap­i­tal mar­kets are becom­ing less friend­ly with major index­es offi­cial­ly enter­ing a bear mar­ket, hav­ing lost 20% or more this year.

Accord­ing to Com­pass Min­ing, a Bit­coin min­ing ser­vice com­pa­ny, that sourced data from Coin­Metrics, revealed that min­er flows to exchanges have reached their high­est point since Jan­u­ary 2022. Com­pass wrote, “Min­ers may begin to sell hodl’d Bit­coin into the open mar­ket. At the very least they are feel­ing the pain after the last major dip in price. Cou­ple this with a down­wards dif­fi­cul­ty adjust­ment – indi­cat­ing min­ers pow­er­ing off – and it seems min­ers may be hit­ting a wall in profitability.”

What you should know

  • Min­ing bit­coin has become less prof­itable as the price of the cryp­to has trend­ed down­wards since the start of the year. With pop­u­lar min­ing machines like Bitmain’s Antmin­er S9 becom­ing mon­ey losers at elec­tric­i­ty prices of six cents per kilowatt-hour.
  • Strug­gling min­ers who would pre­fer not to shut down their rigs can look to raise cap­i­tal in the debt or equi­ty mar­kets and/or sell off bit­coin holdings.
  • Argo Blockchain (ARBK) plans to raise debt and sell some of its bit­coin to cov­er expens­es, the com­pa­ny said in an ana­lyst call for its first-quar­ter results.
  • Core Sci­en­tif­ic (CORZ), the world’s largest min­er by hashrate, has already sold some of its mined bit­coin this year and plans to con­tin­ue doing so. Pre­vi­ous­ly, a con­firmed HODLer, Riot Blockchain (RIOT) sold near­ly half of its mined bit­coin in April after hav­ing also sold a siz­able amount in March.
  • Cathe­dra Bit­coin in a May 30 state­ment said it sold 235 bit­coins dur­ing the month in a move to raise liq­uid­i­ty and “insu­late” itself from fur­ther price declines. The com­pa­ny also had a tough April, oper­at­ing at 45% of expect­ed hashrate through­out the month thanks to storms affect­ing its North Dako­ta site.
  • There’s also Marathon Dig­i­tal (MARA), which – at its earn­ings call in ear­ly May – sug­gest­ed it may sell some of its bitcoin.

With many promi­nent Bit­coin min­ers sell­ing their posi­tions, it means that there will be more sell­ing pres­sure in the mar­ket which casts a dark shad­ow over the mar­ket in the com­ing weeks. BTC, which at the start of the week was stead­fast towards $32,000 has now made a U‑turn, as it trades below $30,000 trad­ing zone again.

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