As a seasoned financial analyst with a deep understanding of the cryptocurrency market, I have witnessed the ups and downs of Bitcoin miners over the past few months. The recent recovery in Bitcoin’s price has brought some relief to this critical cohort of market participants.
As a crypto investor, I’m thrilled to see that Bitcoin miners have started making a profit once again due to the recent significant price surge of Bitcoin over the past week. According to on-chain data, miners seem to be holding onto their Bitcoins instead of selling them for upgrading their equipment or covering operational costs.
As a researcher studying the Miner Sustainability metric, I’ve discovered that this group of market participants is currently earning a profitable return on their mining activities. This represents the first profitable month for miners since the previous one, taking into account both hardware and operational costs.
Miners Are in Profit Again
Based on the most recent Bitfinex Research findings, miners have been incurring losses since Bitcoin’s halving in late April. Consequently, this phase has been deemed unsustainable for mining activities. Following their equipment upgrades, however, mining costs are projected to decrease and mining efficiency is anticipated to improve.
An increase in the Miner Profit Sustainability index signals that miners’ financial situation is improving, which could lead to them requiring less Bitcoin sales to meet expenses. This reduction in selling pressure might have a favorable impact on the crypto market.
Since April, Bitcoin miners have played a substantial role in adding selling pressure to the market. Previously, this group of market actors has been known for exerting significant downward pressure following each Bitcoin halving. Their motivation stems from the need to offset their reduced profits after the halving’s block rewards are decreased. However, over time, their influence on the market has waned due to the progressive decline in block rewards, which limits the number of Bitcoins they can sell.
“The Miner Position Index on Bitfinex showed a short-lived increase in June, but has since returned to its normal level. This development signifies a significant change in market conditions, suggesting that various other factors are now having a greater impact on the price of Bitcoin.”
A Shift in Sell-side Dynamics
A significant factor contributing to the decline in Bitcoin’s price currently is the large-scale withdrawal of funds from U.S. Bitcoin spot Exchange-Traded Funds (ETFs).
Following Bitcoin’s peak price in March, Exchange-Traded Fund (ETF) withdrawals took center stage in the market, outweighing selling pressure from miners. Consequently, the influence of institutional and government transactions on the Bitcoin sell-side has grown increasingly prominent.
Despite this, Bitcoin has been on an upward trajectory since July 13, hitting a peak of $68,560, which is its highest point in the last 38 days. This surge came after a substantial 28% rise from its recent low. Market analysts interpret this trend as a clear indication of robust buying power among investors, potentially leading to more price increases in the upcoming months.
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2024-07-23 21:26