Bitcoin miners are currently experiencing a prolonged phase of selling, reminiscent of conditions last seen in 2017, as indicated by on-chain data.
Based on the analysis by CryptoSlate’s lead analyst James Van Stratten on June 17, the Bitcoin market has endured 33 days of miner capitulation. Historically, such capitulation phases typically last around 41 days on average.
Bitcoin Miner Sell-Off In Effect
Miner capitulation occurs when Bitcoin miners are compelled to shut down their operations or sell their BTC holdings to sustain their businesses, indicating current unprofitability.
“The hash rate has declined by over 12% since its peak on May 26, and the upcoming difficulty adjustment scheduled for June 20 is anticipated to be slightly positive,” noted Stratten in a research update on Monday, referencing data from Newhedge.
The primary challenge impacting miner profitability recently has been the Bitcoin halving in April, which reduced the fixed Bitcoin block subsidy for miners from 6.25 BTC to 3.125 BTC per block. Since April 19, the mining industry’s average daily revenue has dropped from approximately 900 BTC to about 450 BTC.
While network fees still contribute to revenue for industry firms, they have dwindled significantly since the post-halving fee surge known as the Runes frenzy. Consequently, mining has intensified dramatically, with only the most efficient facilities able to remain profitable.
Miners who cannot sustain profitability have resorted to selling their coins. According to Glassnode data, over 3,000 BTC has been transferred out of Bitcoin miner addresses in the past 30 days alone. This continues a trend of net miner outflows that began in October 2023, totaling 30,000 BTC sold since then.
“This period marks the longest phase of coin distribution by miners since 2017, adding to the challenges,” noted Stratten.
Despite these challenges, miners collectively still hold over 700,000 BTC, a quantity surpassing the combined holdings of BlackRock and Grayscale’s Bitcoin ETF products.
Which Miners Are Selling?
Despite initial assumptions that large, publicly traded mining firms would maintain efficiency and profitability post-halving, on-chain data indicates even these industry leaders are selling their coins amidst tightening profit margins.
According to a recent research report from CryptoQuant last Wednesday, miners have engaged in significant over-the-counter (OTC) trades, selling approximately 1,200 BTC. A considerable portion of these sales was initiated by Marathon Digital, the largest publicly traded miner in the market.
