Bitcoin Miners Selling Assets Due to Rising Costs and Record Hash Rates

Miners are increasingly under pressure due to rising hash rates and soaring energy costs, prompting them to transfer more Bitcoin to centralized exchanges. This trend, noted by crypto analyst Miles Deutscher, could potentially exert additional downward pressure on prices.

The total hash rate of the Bitcoin network recently reached a record high of 425 EH/s (exahashes per second), marking a 68% increase since the start of the year. Network difficulty, which indicates how challenging it is to mine Bitcoin, has also surged by 63% in the same period, hitting an all-time peak of 57T.

These developments have intensified competition in Bitcoin mining, resulting in diminished profitability. Currently, the hash price stands at $0.06 per terahash per second per day, a stark contrast to the $0.40/TH/s/day observed during the peak of the previous bull market—representing an 85% decline in mining returns.

Facing these pressures, miners may feel compelled to liquidate their holdings to raise capital. Data from Glassnode reveals that miners are sending unprecedented amounts of Bitcoin to exchanges. This situation is exacerbated by high operational costs and potentially reduced rewards due to an upcoming halving event.

On a more positive note, the Bitcoin mining sector is witnessing greater adoption of renewable energy, as highlighted in a recent KPMG report, which enhances its environmental, social, and governance (ESG) credentials. However, this transition might not sufficiently alleviate the immediate financial strain on miners.

Bitcoin’s price has been volatile this year, struggling to surpass the $30K resistance mark on three occasions and retreating to around $26K. This volatility further complicates decisions for miners contemplating the sale of their assets.

The selling pressure from miners represents an internal challenge for Bitcoin, compounded by various external factors that influence its trajectory. Market dynamics continue to be shaped by regulatory news, investor sentiment, and the potential approval of a spot Bitcoin Exchange Traded Fund (ETF). Currently, Bitcoin is trading at approximately $26,828, with a market capitalization of $523.9 billion.