Bitcoin Selloff Looming for Miners
Bitcoin miners are under pressure as revenue has plummeted following the recent halving, which reduced block rewards from 6.25 BTC to 3.125 BTC.
- Crypto research firm Kaiko reveals daily production dropped from 900 to 450 BTC after the halving.
- This decrease translates to a yearly revenue loss of around $10 billion based on historic prices.
Impending Miner Selloff?
Despite initial support from high transaction fees and the launch of meme coins, miners are now facing challenges:
- Marathon and Riot, two major Bitcoin mining companies, hold significant BTC reserves worth billions.
- Transaction fees accounted for 16% of Marathon Digital’s earnings in April.
The recent decline in transaction fees could lead to miners selling off their holdings, impacting the market negatively.
“Forced selling by miners could exert downward pressure on prices.”
Market liquidity tends to decrease during the summer months, exacerbating the situation.
Bitcoin miners have sold most of their reserves during past market downturns but have been holding more recently due to price rebounds.
However, major miners like Marathon are struggling to meet revenue expectations due to various factors.
Challenges with Hash Price
Hash price, a key metric for mining profitability, has experienced a sharp decline:
- Current hash price stands at $0.050 TH/s/day, down 72% from pre-halving levels.
- Network hash rate peaked at around 650 EH/s in April, increasing competition for block rewards.
- Network difficulty reached 83.15 T, near record highs, before a slight dip on May 9.
The combination of dwindling revenue, increased competition, and high hash price challenges are putting pressure on Bitcoin miners.
Hot Take: Brace for Impact
As Bitcoin miners face declining revenue and profitability challenges, a potential selloff may loom on the horizon.
Keep a close eye on miner behavior and market trends to assess the impact of these developments on the broader cryptocurrency market.
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