Bitcoin miners have unleashed over 2,300 BTC onto the market, totaling $145 million in value lately. This massive sell-off comes as network fees plummet and mining rewards halve, pressuring miners into liquidation to sustain operations. Ali, a known crypto analyst, highlights this trend, underscoring the dire situation for miners facing diminished returns and escalating costs.
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Why Bitcoin Miners are Selling BTC
The Bitcoin halving event in April slashed the block rewards from 6.25 to 3.125 BTC, severely impacting miner revenue. Consequently, mining operations have seen their profitability dwindle as the cost of computational power soars. Fees, which once spiked to $150 in a brief surge, have now settled between $3 to $5, a steep drop from $45 in January, according to Kaiko Research.
Economic Pressures from Falling Network Fees
Moreover, the decrease in network fees, down by 90% over the last six months, suggests a broader shift in the blockchain’s economics. Miners like Marathon Digital have responded by selling portions of their Bitcoin holdings.
In May alone, Marathon Digital offloaded 390 BTC, with plans for further sales to stabilize its financial footing. This trend is not isolated, as overall BTC transfers from miners’ wallets have dropped, indicating a move towards market stabilization, as per Bitfinex Alpha report.
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Market Implications and Miner Strategies
However, the continuous sale of Bitcoin by miners could potentially depress the crypto’s price further. This selling pressure is exacerbated by older mining equipment becoming economically obsolete due to higher operational costs, forcing more miners to liquidate their holdings either in over-the-counter transactions or openly in the market.
Significantly, the combination of lowered fees, reduced mining rewards, and increased operational costs creates a challenging environment for Bitcoin miners. This environment might lead to further sales unless there’s a shift in market dynamics or mining technology.
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