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Recent data from Coin Metrics indicates that miners have sold at least $500 million worth of Bitcoin so far in June.
The once-thriving Bitcoin mining sector is now its biggest adversary. According to many sources, Bitcoin miners are selling more coins to finance the expenses of their operations. The increasing selling is dragging on any possible Bitcoin rebound, resulting in more selling as miner profitability continues to fall below production costs.
A recent analysis by Arcane research found a considerable increase in the quantity of Bitcoin exiting the wallets of miners. “Public mining businesses sold 30% of their bitcoin output in the first four months of 2022.” The plunging profitability of mining compelled these miners to sell more than 100 percent of their production in May,” the study said, suggesting that operating expenses outweighed earnings, causing miners to dig into Bitcoin reserves.
Bitfarms, a big Bitcoin miner, joined a lengthy list of companies who have increased their selling despite the record-breaking cryptocurrency decline. In an effort to increase its liquidity, Bitfarms reportedly sold 3,000 Bitcoin for $62 million in the previous week.
The present pattern of miner capitulation was also noted in recent research by Coin Metrics. The crypto analytics company believes that miners have sold Bitcoin worth at least $500 million so far in June, reducing their holdings by about a third.
The Bitcoin Hash Ribbons, an indicator measuring the 30-day and 60-day moving averages of the network’s hash rate, has also lately shifted to capitulation. This indicates that miners are shutting down their equipment since it costs more to operate them than they can earn in block rewards.
When the Bitcoin hash rate falls, the network is designed to reduce mining difficulty. As difficulty changes can only occur every two weeks, it may take some time for the network to regain equilibrium with miners once again. The last adjustment occurred on June 22 and reduced difficulty by -2.35 percent.
Simultaneously, the forced sale of mining operations might impede any real rebound of the leading cryptocurrency asset. When Bitcoin’s price falls below its average production cost of about $30,000 per BTC, miners will continue to sell their reserves in order to survive. This might drive miners to sell more Bitcoin to meet their expenses, depressing the price of Bitcoin, preventing a rebound, and locking them in a vicious cycle of selling.