Bitcoin miners are currently facing a tough situation as they continue to grapple with the $70,000 price level. Data from CryptoQuant shows that there has been a significant increase in the flow of Bitcoin leaving miners’ wallets for exchanges, indicating a selling event. This trend peaked last weekend, with the hourly transfer of Bitcoin from miners to exchanges reaching more than 3,000 bitcoins on June 9. Additionally, miner selling through over-the-counter desks saw its biggest daily volume since late March, with miners selling 1,200 bitcoins the following day.
Impact of Post-Halving Economics
According to Mike Colonnese, an analyst at H.C. Wainwright, miners are now competing for 450 bitcoins per day network-wide, as opposed to 900 less than two months ago, post-halving. The decrease in mining rewards, coupled with rising transaction fees, has resulted in a 45% reduction in mining economics compared to pre-halving levels. This has led miners to sell off their Bitcoin in order to cover operating expenses and possibly capital expenditures.
Julio Moreno, head of research at CryptoQuant, noted that daily Bitcoin miner revenues have dropped by 55% since reaching their peak in March 2024. This decline is largely due to reduced transaction fees rather than the halving of miners’ block rewards. Despite record-high transactions on the network, the network’s total daily transaction fees are over 44% lower than they were pre-halving, indicating a challenging environment for miners.
Bitcoin has been struggling to surpass the $70,000 level since its record high of $73,797.68 on March 14. The current selling pressure from miners comes in the context of low revenues after the halving, making it difficult for the cryptocurrency to rally above key resistance levels. While the hash rate of the Bitcoin network has not seen a significant decline since the April 19 halving, the pressure on miners’ profitability remains due to the decreasing block rewards and increasing competition.
Large publicly traded miners such as CleanSpark and Iren (formerly Iris Energy) seem to be in a better position post-halving. Colonnese estimates that these miners are currently generating over 50% gross margins with Bitcoin at $70,000. Despite this, smaller Bitcoin companies with less efficient fleets, higher power costs, and limited access to capital are facing significant challenges. Unless Bitcoin prices experience a substantial rally in the short term, these companies could struggle to survive in the coming months.
The signs of miner capitulation in the Bitcoin market are becoming more apparent as miners grapple with reduced profitability and increasing competition. While large miners have some breathing room with healthy profit margins, smaller players are facing an uphill battle. The future of Bitcoin mining industry will heavily depend on how the market evolves and whether miners can adapt to the changing dynamics of the industry.