Many indicators are used to define the state of the cryptocurrency market. And some of them apply more particularly to Bitcoin, the still undisputed master of these digital lands. Because the impact of its current decline has immediate consequences for its entire ecosystem. With, in the front line, the BTC miners behind the security of its network and its monetary creation. And recent data shows that the main players in this industry are suffering.
Last year was historic for the cryptocurrency market, but also for miners in the Bitcoin network. Because the latter have earned over this period the colossal sum of 15 billion dollars, according to data published by The Block. An estimate – to be taken into account as such – which represents an increase of more than 200% compared to the previous year (2020). And since then, a slow descent into hell accelerating over the last few months.
Because the profitability of Bitcoin miners measure yourself directly by your selling price. And this is much more delicate when it comes to “public” companies in this industry, most of which have recently been listed on the stock exchange. With major players such as Marathon Digital, Riot Blockchain or Hut 8 mining, to name but a few. The latter are currently facing a complicated market situation that is starting to feel capitulation.. Because the time is obviously no longer for accumulation, but for massive sales.
Mining – Massive resale of BTC production
The situation is complicated for all players in the cryptocurrency ecosystem. With ongoing bankruptcies and improbable bailouts. But whatever happens, unfavorable market conditions carrying out a cleaning that the most cynical continue to present as welcome and necessary. A reality that obviously does not spare the mining industry dedicated to the Bitcoin network. In any case, according to the latest data published in a report by the analysis structure Arcane Research on the subject. And this especially about listed mining companies.
Indeed, since the beginning of the year these companies used to resell on average 30% of their BTC production. This is largely to cover the significant costs associated with this industry, considered by its critics to be too energy-intensive. But things have visibly changed over the last month of May. Because over this period alone, it is the entirety of this production that has been resold. And it will probably cover almost identical fees, but with a BTC whose price has been divided by 2 at a minimum.
Just see the latest official announcements from the Bitfarms company, rolled out in Toronto. Indeed, the latter has just sold 3000 BTC, or almost half of its stocks.. This in order to “reduce its debt” according to the terms used in its press release on the subject. All accompanied by a plan which, in the future, will no longer only be accessible on a HODL-type strategy on its daily production of BTC.
” While we remain optimistic about the long-term appreciation of BTC price, this strategic shift allows us to focus on our top priorities. These consist of maintaining our world-class mining operations and continuing to grow our business in anticipation of improving mining economics.. »
Jeff Lucas, CFO of Bitfarms
Mining – What impact on the price of Bitcoin?
And the real question everyone is asking is what consequences this situation could have on the price of BTC. Because Bitcoin network miners collectively hold over 800,000 BTC at present. Which makes it – and by far – one of the largest entities in this market. A sum of which nearly 46,000 BTC belong to listed mining companies. And, according to analyst Jaran Mellerud of the structure Arcane Research, their selling frenzy could well trigger a new collapse in its price.
” If they are forced to liquidate a considerable portion of these holdings, it could help drive the price of Bitcoin further down.. »
Jaran Mellerud, Arcane Research Analyst
Because the current situation is critical. With Bitcoin price revisiting its 2017 levels below $20,000. This follows a new 4-year low, recently validated at $17,600 around last Saturday (June 18th). and an indicator Miner to exchange stream which very clearly indicates a large increase in the sending of BTC on exchanges by miners. A level that had not been reached since January of last year (2021). And this obviously for the purpose of reselling them.
At the same time, BTC’s average hash price also fell to a level not seen in 18 months. With an ever increasing amount of miners unplugging their machines as they are no longer worthy. And, according to some analysts, an ongoing capitulation that could well be the sign of a long-awaited bottom in the price of Bitcoin. At least that’s what trader and analyst Charles Edwards seems to think. A quote that will end this article on a hopeful note (without however constituting investment advice).
” When miners give up, it’s probably the most powerful Bitcoin buy signal ever. »