As a researcher with experience in the Bitcoin and cryptocurrency market, I believe that the ongoing revenue decline faced by miners could lead to a selloff in the near future. The recent halving has significantly reduced block rewards, leading to around $10 billion in annual revenue loss based on the current prices. While miners were initially able to keep their revenue streams afloat through high transaction fees and new coin launches, these sources of income have since dwindled.
The potential sale of Bitcoins by miners could be imminent as they confront rising challenges due to significantly reduced earnings post-April 2020’s Bitcoin halving. This event cut block rewards from 6.25 Bitcoins to 3.125 Bitcoins.
On May 13, cryptocurrency research firm Kaiko disclosed that the latest Bitcoin halving reduced the daily generation from 900 to 450 coins, leading to approximately $10 billion in annual revenue decrease, considering the prevailing market prices.
Miner Selloff Imminent?
As an analyst, I’ve observed that miners initially benefited significantly from the surge in transaction fees generated by the meme coin craze and the launch of Bitcoin Runes. However, the situation has since changed, and both meme coins and Bitcoin Runes have seen a noticeable decrease in activity, resulting in reduced revenue streams for miners.
According to Kaiko, two major publicly-traded Bitcoin mining companies, Marathon and Riot, collectively hold approximately 17,631 Bitcoins valued at around $1.1 billion and 8,872 Bitcoins worth over $500 million, respectively.
As an analyst, I’d put it this way: In April, transaction fees represented approximately 16% of the total Bitcoin revenue generated by Marathon Digital for me. This figure marked a significant increase compared to March when fees accounted for only around 4.5%. It is essential to mention that the recent decrease in fees might trigger selling pressure from miners within the organization.
If miners were compelled to offload just a portion of their crypto holdings within the next month, it could lead to a downturn in market prices.
“Trading activity typically slows down, and liquidity dries up over the summer months,” it added.
Could $BTC miners become forced sellers as fees fall?
Higher transaction fees offset lower miner rewards for firms in April, but this has since reversed.
Check out our latest debrief for the full trend:
— Kaiko (@KaikoData) May 13, 2024
The report reads that Bitcoin miners sold most of their reserves amid the crypto meltdown in 2022.
As a researcher, I’ve observed an upward trend in the holding of this asset over the past two years, which has been accompanied by a significant surge in prices. The asset’s price index has risen approximately 350% from its cycle low of $16,500 in December 2022 to reach over $73,500 at its peak in March.
Some significant mining companies, like Marathon, have fallen short of their projected earnings due to this issue and various other reasons.
Hash Price Woes
As a hash rate analyst, I’ve noticed a significant decrease in profitability or hash price recently. It currently hovers around $0.050 terra hashes per second per day, based on data from HashRateIndex. This represents a substantial decline of 72% compared to the $0.182 TH/s/day level attained near the time of the halving.
In late April, the typical mining network’s hash rate reached a high of approximately 650 Exahashes per second. This development added to the challenges miners were facing as they stepped up their efforts to secure the next reward, resulting in increased competition among them.
The network’s difficulty level in measuring its complexity has reached nearly peak points at 83.15 Terahashes per second (TH/s), although it previously peaked at 88 TH/s on May 9.
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2024-05-14 14:12