• Wed. Jun 22nd, 2022

Bitcoin miners have started dumping their holdings

ByHazel R. Lang

Jun 2, 2022

For a very long time, bitcoin miners kept the spoils of their activities. This was when the profitability of cryptocurrency mining was still high. Due to high cash flow, these miners could afford to keep a good portion of their rewards while continuing to run their operations. However, recent market trends have caused the profitability of bitcoin mining to plummet, leading miners to start tapping into their BTC stash and selling to keep operations alive.

Bitcoin miners sell

A good number of bitcoin miners had held on to sizable bags, mostly thanks to the bear market. With the market turmoil and bitcoin now trading below $29,000, it has become more difficult for miners to hold these coins without compromising their ability to fund their operations. The result of this was that a number of prominent bitcoin mining companies declared that they had sold or would sell some of the BTC they held.

Related Reading | Bitcoin Exchange Exits Suggest Investors Are Starting to Hoard

Marathon Digital is undoubtedly one of the first names that pop up when the topic of bitcoin mining comes up. The company was able to consolidate its position as a leading competitor in the mining world and attracted a large number of investors, but even large companies could not escape the onslaught of the market.

Last month, the company announced in an earnings call that it may have to sell some of its bitcoin holdings. Marathon Digital holds over 9,600 BTC, most of which has been held for almost two years. However, it looks like the day of reckoning is fast approaching and even big companies will have to dump some of their BTC.

BTC continues to struggle as sell-offs intensify | Source: BTCUSD on TradingView.com

Companies that have already sold some of their BTC include Riot and Cathedra Bitcoin. Riot reportedly sold around $10 million worth of Bitcoin in April, for a total of 250 BTC. More recently, Cathedra Bitcoin announced that it sold 235 BTC at an average price of $29,152. It amounted to just over $8.7 million. The company explained in its report that this was to help it protect itself “from further declines in the price of bitcoin and to maintain its liquidity position.”

Mining is no longer profitable?

Bitcoin mining remains profitable, but with the price down more than 50% from its all-time high, profitability has declined significantly. A report by Bitcoinist highlighted the profitability of BTC mining machines. Miners are now bringing in 50% less cash flow than they did when BTC was trading at $69,000.

Related Reading | Bitcoin tentatively rests above $31,000, Bull Rally or Trap?

Moreover, the daily income of miners is still low. It had risen 4.50% last week to land at its value of $26,706,581, but that remains low. This is the result of the average trade value and daily trades declining over the past week.

Confidence in Bitcoin mining stocks is also down. So now miners are forced to sell some of their BTC holdings in order to continue their operations.

Featured image from Outlook India, chart from TradingView.com

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