Bitcoin Miners Sell Off

sgt_markets_observations_190624

Bitcoin miners have been facing significant challenges and have entered an extended sell-off phase, the longest in seven years. Here are the key points:

Miner Capitulation and Sell-Off

Bitcoin miners are currently 33 days into a miner capitulation period, where they are forced to shut down machines and sell their BTC holdings to stay afloat, indicating unprofitable operations.

 

Over the past 30 days, miners have distributed over 3,000 BTC from their addresses, continuing a trend of net outflows since October 2023, with 30,000 BTC sold during this period.

 

This sell-off phase is the longest for miners since 2017, adding to the headwinds they face.

Factors Driving Miner Selling

The Bitcoin halving in April 2024 reduced the block subsidy for miners from 6.25 BTC to 3.125 BTC per block, cutting their baseline revenue by half.

 

While transaction fees provided a temporary boost after the halving due to the Runes protocol, this surge quickly faded, leaving miners with reduced overall revenue.

 

JPMorgan estimates the current mining cost for Bitcoin is around $45,000, down from above $50,000 as inefficient miners exit the network.

 

The decline in Bitcoin prices also increases the number of unprofitable miners who must sell their holdings or shut down operations.

Publicly Traded Miners Selling

Even large, publicly traded mining firms like Marathon Digital have been selling their BTC holdings, with Marathon selling 1,400 BTC worth $98 million since the start of June.

 

On June 10th, miners sold at least 1,200 BTC, the highest daily total in two months, with OTC volume also spiking to a two-month high.

 

Transfers from mining pools to exchanges reached a two-month high in mid-June as miners cashed in on BTC's rally to around $70,000.

While miners collectively still hold over 700,000 BTC, the extended sell-off phase highlights the significant profitability challenges they face in the post-halving environment, forcing even major players to liquidate portions of their holdings.

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