Since the advent of BTC mining, miners have stored most of the Bitcoin they mined. Then, the cash flow was enough to handle expenses since Bitcoin’s price was high.
As miners mined Bitcoin, they saved a large portion and used the rest to finance their operations. Unfortunately, the recent market crash is forcing miners to sell part of their Bitcoin reserve. They are selling so they can remain in business.
Currently, Bitcoin is trading in the $30k region. As a result, miners cannot fund their mining activities with the Bitcoin they mine. Moreover, the mining difficulty for the flagship currency has increased.
Additionally, Bitinfocharts noted that BTC’s mining profitability has dropped to its lowest since 2022. Consequently, several crypto mining firms have decided to sell their holdings.
Why Are Bitcoin Miners Selling BTC?
As per the Compass Mining report, the flow of Bitcoin from miners to exchanged peaked in January. This data can also be found on Coinmetrics.
The huge sales led to a significant drop in the value of Bitcoin since that time. In addition, many miners are afraid that the price may drop below $20k.
Furthermore, Canadian miner, Cathedra recently joined the list of miners to sell crypto holdings.
According to a report in May, the company sold over 235 BTC for around $8.8 million. This is almost all of its Bitcoin holdings. The company noted that price drops would not affect the transactions.
In April, Marathon Digital mining firm noted that it might liquidate part of its BTC. The company has mined over 9,600 BTC and saved most of it over the years. Unfortunately, with the drop in the crypto market, miners may have to sell their BTC.
Is Mining Bitcoin Still Profitable?
With the recent drop in Bitcoin’s price, many would assume the sector is no longer profitable. However, Bitcoin miners continue to set up new stations and expand their operations.
Hence, the mining sector is profitable, but the margin has dropped. When Bitcoin was trading at $68,000, miners returned more cash flow. Presently, Bitcoin’s price have dropped by over 50%.
Furthermore, miners’ daily revenue is still low. Last week, it reduced by 4.5% to $26,706,591. This drop is due to a reduction in the daily and average transaction value. Until the crypto market becomes bullish, Bitcoin miners will continue to record low profits.
At the start of June, the crypto market gained momentum, and Bitcoin crossed $30k. However, the buy orders could not sustain the market, and the currency dropped below $30k.