Miners sold nearly 30% of record BTC stash since May
The trip to $25,000 this month decreased pressure on a Bitcoin mining sector which has struggled throughout 2022.
At one point, fears abounded that miners’ production cost was far higher than the Bitcoin spot price, and that heavy sales would result in order for miners to stay in business. Worse still, many may have to retire altogether due to their activities no longer being financially viable.
Data from the period since May appeared to confirm that major upheaval was taking place. As Arcane notes, one public miner alone — Core Scientific — sold around 12,000 BTC in the period from May to July.
While the trend showed signs of reversing last month, it will take even higher BTC prices to allow even the largest mining operators to hodl again.
“Even though the public miners sold less than half the amount in July as in June, we still see that they are draining their holdings if we look at the percentage of the bitcoin production sold,” Arcane analyst Jaran Mellerud explained:
“The public miners sold 158% of their bitcoin production in July, making it the third month in a row where they sold more than 100% of production.”
For context, in April 2022, miners’ hodled coins were at an all-time high, thanks to years of saving at least 60% of BTC received via block subsidies each month.
After subsequent sales, however, their balance is trending toward 30% lower, and will only head higher until the monthly expense equilibrium is restored.
“I expect the selling pressure to continue at between 100% and 150% of production unless something significant happens to the bitcoin price. This is equivalent to between 4,000 and 6,000 BTC per month,” Mellerud added.
Bitcoin may have increased 36% from its June lows, but for miners, the pain will continue.
Light at the end of the tunnel
Revenue jumped nearly 70% in August, while proof-of-work (PoW) mining, in general, is increasing in prominence beyond the crypto sphere.
Environmental concerns are no longer holding back big money, as evidenced by the world’s largest asset manager, BlackRock, praising the sector this month.
Steadily increasing Bitcoin fundamentals meanwhile provide real-time proof that the situation is stabilizing for the backbone of the Bitcoin network. Data from BTC.com estimates that difficulty is set to increase by around 0.7% this week.
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