During the second week of June, Bitcoin miners reversed the hoarding trend and are now selling considerable amounts.
Since May 2023, Bitcoin miners brought a strong trend of coin accumulation. However, the magic was broken during the second week of June, according to data from analytics firm Glassnode.
The coin generators would have been hit by three very determining forces in their decision-making. It is about the high difficulty of the network, which makes the ability of miners to find valid blocks to process uphill. The other factor is the drop in Ordinals trading. Finally, the fall in the value of BTC also plays its part.
Thus, the large coin generators now seem to take a sell position that may prove negative for the price of BTC.
Factors Keeping Bitcoin Miners Knocked Down
During 2023, the price of Bitcoin became a relief for the miners’ profits. After a 2022 of great falls, the industry received a new stimulus. Despite this, the price of the pioneering digital currency still remains well below the entry level of many miner investments.
This means that any slip generates a negative situation in the groups in this area, which seems to be the case. The US Securities and Exchange Commission (SEC) crackdown on exchanges last week pushed back digital asset prices.
The same thing has to do with the Ordinals. The boom in activity on the BRC20 with NFTs and meme coins like Pepe Coin clogged the Bitcoin mainnet, leading to high fees. Trading with Ordinals slowed, however, and commissions fell from the highs they had been since February.
With this, the two factors, the decline in commissions and the fall in the price of Bitcoin hurt the gains. The third factor is the difficulty of the network.
The Increased Difficulty of the Blockchain
Every 2,016 blocks processed, the Bitcoin Blockchain experiences a difficulty adjustment that directly affects miners. The objective of these automatic adjustments is to keep the processing time between one block and another in a range of approximately 10 minutes. When the hashrate (combined computing power of all connected miners) drops, the difficulty goes down. When the hashrate goes up, the difficulty goes up.
With the rise in the price of Bitcoin and the rise of Ordinals in 2023, mining became very profitable. Mining companies took advantage of the profits to expand and prepare their capacity for the halving of 2024. In simple words, new connections are skyrocketing.
All of this pushed the Bitcoin hashrate to all-time highs. As a result, the difficulty was also brought to levels never seen before. According to data from BTC.com, the next adjustment will take place before the end of this Tuesday, and a new rise of more than 3% is expected, which would set a new record at 52.80 T.
Consequently, all three factors combined forced Bitcoin miners to sell their production to pay for operating expenses.
The Stress Level of Mining Companies
Mining companies maintained an accumulation trend since May, which broke in the second week of June. The wallets tracked by the aforementioned on-chain analysis firm, as belonging to Bitcoin miners, seem to show stress.
On the other hand, the cost of producing a BTC is increasingly suffocating, especially in times of rising temperatures. In any case, to produce a Bitcoin, approximate expenses between $21,000 and $35,500 dollars are required. This is a complex strip, considering that the price of the virtual currency is below $26,000.
Glassnode notes that shipments from Bitcoin miners to exchanges accumulated over $70 million last week alone. The firm ensures that it is the third largest amount recorded and the largest since $101 million during the 2021 bull market.
By Audy Castaneda
