Miner sales and options contract expiration could put further downward pressure on Bitcoin.
Amid the general price decline in the crypto market, Bitcoin miners started to liquidate their reserves to deal with their operating costs.
Some major US-listed crypto mining entities like Marathon Digital and Riot Blockchain sold more bitcoin than they collected last month. According to a report from Arcane Research, miners are liquidating their Bitcoin reserves to record levels to deal with the struggles of their production.
In the first four months of 2022, public mining entities got rid of 30% of their Bitcoin production. The plummeting profitability of mining forced these miners to increase their sell rate to more than 100% of the production in May.
Miners Liquidate their Bitcoin Reserves
The investigation highlights that this increase in Bitcoin exits from the wallets of miners, who are the holders, could lead to a decline in the prices of the flagship digital asset.
In short, this situation means that operating costs surpassed miners’ profits, forcing them to draw from their Bitcoin savings to generate the difference, which could translate into fear sentiment for the market. Arcane Research analyst Jaran Mellerud highlighted that if they get obliged to liquidate a sizable piece of these holdings, it could be helpful to boost the price of Bitcoin even further.
On the other hand, a recent Coin Metrics report also highlighted the current sell-off trend among miners, as reported by Crypto Briefing. According to that cryptocurrency analytics firm, miners have sold at least $500 million worth of Bitcoin in June, reducing their holdings by almost a third part.
Miners’ wallets had held bitcoin throughout 2022, but they began minimizing their holdings amid the recent crash in the market. Nonetheless, according to the report, miners still hold at least $2.5 billion worth of Bitcoin.
The reports coincide with recent announcements by Toronto, Canada-based miner Bitfarms, which highlighted that it had sold 3,000 BTC of its reserves, valued at just over $60 million, to reduce its debt and increase its liquidity.
Bearish Pressure, Miners in Trouble
Meanwhile, beyond the series of liquidations, other metrics also point to miners potentially going trhough significant difficulties amid declining prices.
According to Crypto Briefing, data from the Bitcoin Hash Ribbons indicator, which measures the network’s 30- and 60-day hash rate moving standards, also explains that BTC miners are turning off their machines as it starts to cost more to deal with them.
By: Jenson Nuñez
