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Bitcoin miners compelled to sell to meet operating expenses

Published by
Nonhlanhla P Dube

Bitcoin miners are selling their gains to cover rising operating costs. Miners can no longer afford to HODL as electricity prices continue to rise and Bitcoin continues to fall.  

 Data shows, the sell-off trend began in early 2022. Experts speculated at the time that miners liquidated their profits because they expected Bitcoin to continue declining.

They were correct. When Bitcoin fell to its 18-month low on June 14, mining equipment made prior to 2019 became unprofitable. Bitcoin is currently trading for roughly R322K, which is close to the minimal profitability price for a 2021 model Antminer S19j.

Inability to HODL

According to Arcane Research, public Bitcoin miners receive approximately 900 Bitcoins every day. They tend to store as much as possible and grow to be some of the largest whales available.

However, rising energy bills and falling Bitcoin values put public miners in a difficult position.

Bitcoin miners are selling their gains to cover rising operating costs. Miners can no longer afford to HODL as electricity prices continue to rise and Bitcoin continues to fall.

Wallet balances of Bitcoin miners

As the following data shows, the sell-off trend began in early 2022. Experts speculated at the time that miners liquidated their profits because they expected Bitcoin to continue declining.

They were correct. When Bitcoin fell to its 18-month low on June 14, mining equipment made prior to 2019 became unprofitable. Bitcoin is currently trading for roughly R322K, which is close to the minimal profitability price for a 2021 model Antminer S19j.

Inability to HODL

According to Arcane Research, public Bitcoin miners receive approximately 900 Bitcoins every day. They tend to store as much as possible and grow to be some of the largest whales available.

However, rising energy bills and falling Bitcoin values put public miners in a difficult position.

Bitcoin is being sold by public miners

According to the data, public mining businesses sold 30% of their Bitcoin output in the first four months of 2022.

GlobalBlock analyst Marcus Sotiriou reacted to the sell-off trend, stating that the key cause for the sale was:

“due to profitability decreasing with increasing electricity prices, so they are forced to liquidate some of their Bitcoin to cover operating costs.”

Another Glassnode expert noted that other miners have also been sellers. He said:

“Miners’ balances have stagnated from the 2019-21 accumulation uptrend and reversed into decline. Miners’ have spent around 9k $BTC from their treasuries last week, down from around 60k $BTC,” 

The drop was predicted

Despite the weight of the data pointing to a sell-off trend, experts point out that this is how miners typically behave during downturn markets.

Miners typically accumulate during bull markets and sell during bear markets to satisfy interest payments or cover greater costs. For example, during the previous bear market in November 2018, miners sold a significant amount of their coins when Bitcoin fell.

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube
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