tl;dr
Forced selling by Bitcoin miners is expected to continue due to reduced rewards and lower network fees following the halving event. Bitcoin network fees have dropped by 90% in the last six months, impacting miners' profitability. With block rewards decreasing and mining costs rising, miners are unde...
Forced selling by Bitcoin miners continues post-halving, with reduced rewards and lower network fees driving divestment to cover operational costs.
Bitcoin network fees plummet by 90% in the last six months, dropping from $45 in January 2024 to an average of $3 to $5, following a brief surge to $150 post-halving.
Bitcoin miners face pressure from reduced block rewards, increased mining costs, and stagnant Bitcoin price, leading to potential further selling of holdings.
Financial pressures on Bitcoin miners prompt sales of BTC holdings, potentially driving the price lower, with forecasts indicating potential support levels and consolidation trends in the industry.
Forced selling by Bitcoin miners is expected to continue due to reduced rewards and lower network fees following the halving event. Bitcoin network fees have dropped by 90% in the last six months, impacting miners' profitability. With block rewards decreasing and mining costs rising, miners are under pressure to sell more of their holdings to cover expenses. This could potentially drive the BTC price lower, with the immediate support at $60,000. Financial pressures may also lead to mergers among miners as they seek to enhance profitability in the post-halving landscape.
According to the latest report from Kaiko Research, forced selling by Bitcoin Miners is likely to continue ahead amid reduced rewards and lower network fees. Over the past two months following the Bitcoin halving event, Bitcoin miners have been divesting their holdings to cover their operation expenses.
As per the Kaiko report, the Bitcoin network fees have collapsed by 90% in the last six months. While the Bitcoin network fee was $45 in January 2024, it has now come down to an average between $3 to $5. Soon after the Bitcoin halving event, the network fees surged all the way to $150 for a very short period of time amid the massive surge in the NFT minting taking place on the Bitcoin blockchain. This was a short-term respite to the Bitcoin miners before the network fees headed significantly downwards. Bitcoin miners are also facing growing pressure as block rewards have dropped from 6.25 BTC before halving, to 3.125 BTC post halving. On the other hand, mining costs have surged as the demand for computational power has increased. At the same time, the Bitcoin price remaining almost flat and showing sideways consolidation has added to further woes. Also, there’s less bullish optimism among retailers or institutions with inflows into spot Bitcoin ETFs dropping significantly in comparison to the first quarter.
With the BTC price receiving little stimulus from other ends, the Bitcoin miners will have no option but to sell more of their holdings. Kaiko reported that one of the largest Bitcoin miners – Marathon Digital – had to sell 390 BTC during the months of May and plans for additional sales to stabilize its operations. This could push the BTC price even lower if other miners join the bandwagon. Currently, the immediate support for Bitcoin on the downside is $60,000. Losing this can trigger a BTC price drop to $57,000 and $54,000 subsequently.
Kaiko also predicts that financial pressures will lead to mergers among miners aiming to streamline operations and enhance profitability. This trend of consolidation is expected to persist as the effects of Bitcoin halving continue to impact the industry. For instance, Riot Blockchain attempted a hostile takeover of Bitfarms Ltd., illustrating the consolidation trend. Similarly, CleanSpark Inc. recently announced an all-stock acquisition of Griid Infrastructure Inc. for $155 million.