Bitcoin miners sold up to 100% of their outputs from May as the crypto dump got worse in June. Arcane Research even predicted that the miners sold more BTC in June so let’s read more in today’s latest Bitcoin news.
The Digital Assets company Arcane Research shows that the public traded companies sold up to 100% of their mined coins due to declined profit margins and the volatile market conditions. The selling rate jumped from 30% in the first few months of 2022. during the bull market, the BTC miners tended to keep most of the mined coins when the landscape was in a calm state but when the dark times hit and BTC crashed below $30,000, most miners were forced to abandon their strategies and sell their coins.
One of the key reasons rests on the crashing profitability amid rising hashrate and pessimistic market conditions. The research indicated the extremely high profitability which led to massive investment in the miner production capacity and result in a growing hashrate while the BTC price dropped. The phenomenon pushed down the profit margins as the miners were required to deploy more power to gain equivalent outputs as they did in the past. Despite the many advantages of cheap electricity, some miners struggled to create cash flow for their mining businesses as BTC crashing sowed no respite:
“The increasing hashrate and the falling bitcoin price have pushed the mining profitability down to levels not seen since 2020. At $40 per MWh, the energy-efficient Antminer S19 currently yields a cash flow per bitcoin of $13k, corresponding to an 80% decline from the November 2021 peak. The Antminer S9, our proxy for old generation machines, is now cash-flow negative.”
Bitcoin miners sold their coins and for example, Marathon as the biggest holder among all listed miners had a debt of $792 million. The giant used most of the loan to purchase machines and bet the cryptocurrency could keep increasing in value. Given the asset’s price crashing and bringing the value of machines down, most miners had to sell their outputs and pay off their debts and cover the operational expenses. Miners had a few options to finance their operations without selling BTC and issue equity or rising debt with the machines or BTC holdings as collateral.
This was easy during the bull market in2 021 when the capital was flowing. The market conditions are changing now and as a result, we will see more mining companies diverge from their hold strategies. Canada-based mining giant Bitfarms announced to be adjusting the HODL strategy and selling 3000 BTC or half of the total BTC holdings for $63 million and improve the corporate liquditiy which was the latest example of the miners deleveraging and decreasing debts amid the market volatility enhancing.
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