There are many triggers, but it is necessary to closely examine the sales in the BTC and broader cryptocurrency markets. Looking at the situation of miners in this context can give us significant insights. Miners represent an important segment within the group holding Bitcoin (BTC). So, what is the current situation here?
Who is Selling Bitcoin?
Bitcoin (BTC) mining difficulty (hash rate) had been rising for 18 months. The reason for the steady increase was rapidly growing operations, and miners wanted to make the most of this period before rewards decreased with the halving. Moreover, as network revenues multiplied with ordinals and other factors, interest also increased exponentially.
However, the 18-month hash rate increase has now ended, dropping to 600 exahashes per second (EH/s). Ki Young Ju, the founder and CEO of CryptoQuant, suspects BTC sales as the reason for the disruption in the rising trend of mining difficulty.
“The 18-month rising trend of Bitcoin hash rate has broken, indicating that some miners have surrendered.”
So, can we say that miners are selling BTC, causing the Bitcoin (BTC) price to drop? The weakening of miners’ daily exchange transfers since June 5 suggests that this decline may not be so related to miners.
The losses in price are more fueled by negativity on the macroeconomic front. The 3-year Fed interest rate forecasts, which also worry individual investors, indicate that members may make much slower rate cuts, even though they are not binding.
Why is Mining Difficulty Decreasing?
Bitcoin halving and the shutdown of older generation mining devices that are no longer as profitable could be the main reasons for the decrease in mining difficulty. A report by CoinShares dated April 19 predicted this.
“Our model predicts that the hash rate will rise to 700 exahashes by 2025, but after the halving event (BTC block reward halving), the hash rate could drop by up to 10% as miners shut down unprofitable ASICs.”
With increasing electricity costs and block rewards falling to 3.125 BTC, the profitability for two older ASIC models, S19 XP and M50S++, has been nullified. In fact, depending on regional changes in energy costs, there are places where these models are operating at a loss.
