Bitcoin Miners Sell BTC Holdings Amid Prices Plunge to Cover Energy Costs

Recent reports indicate that Bitcoin miners are selling most of their crypto tokens on exchanges to cover most costs. This comes as inflation rates have been rising throughout the year, perhaps causing much trouble for investors.

Bitcoin Miners Selling Holdings to Exchanges 

The Bloomberg tweet reads, 

“Bitcoin miners are beginning to sell tokens they’ve hoarded to cover costs with the prospects for industry growth slowing and prices few signs of rebounding.”

Reports indicate that there has been a massive flow of miners into exchanges over the past few months, especially in May. Miners moved about 195663 coins, averagely priced at $6.3 billion, from their mining wallets into exchanges in the month. These mining rigs are already moving most of their mined stash to sell them in exchanges. Will Foxley of Compass Mining recently noted that 

“I think miners are just talking about the macro environment and think it is probably prudent to sell Bitcoin at these levels to keep the operations safe.”

The recent metrics is still slightly flawed since its not inclusive of the OTC exchanges of BTC. According to Foxley, many miners prefer to exchange their BTC over the counter. However, although the metric could be incomplete, the current data still indicates massive hykes on miners’ transfers to exchanges. 

Miners Struggling With Operational Costs and High Inflation 

According to reports, one of the main reasons miners are selling BTC is to cover their operational costs and expenses. Other small miners bet high stakes on BTC prices are rising. However, with BTC dropping almost 60% from its all-time high, these miners risk liquidation. Hence, small new miners sell some of their BTC stashes to avoid liquidations. 

A good example is Cathedra. In their recent report, the company mentioned that they sold about $8.7 million of BTC to protect themselves from further price plummets. Another company, Riot Blockchain, sold half of its total Bitcoin production for April, worth $9.4 million, for similar reasons. 

Reports also indicate that some companies are selling their stash after noticing reduced profitability in BTC. Basically, with BTC losing so much of its value, the mining profitability ratio has been plunging this year. The reduced profitability now forces the companies to use their reserves for expenses.

The current inflation surges are also a major factor behind the problems noticed. This year, the inflation rates in the US, Canada and European regions have been increasing at tremendous speeds. The increased inflation rates and the efforts set by central banks to control the problem have been affecting cryptos, including BTC. Even the cost increase can be slightly attributed to the inflation rates. 

New Energy Focused Regulation 

A few days ago, the US Senate passed a bill that will force all mining companies not using renewable energy sources to either relocate or close down for two years. This 2-year moratorium on BTC mining will vastly affect many large-scale miners using non-renewable sources. The many constraints around BTC are driving the price plunges. However, BTC and crypto adoption is still rising amidst these challenging times.