Bitcoin hitting $25,000 this month has eased the pressure on the mining sector, which has been struggling throughout 2022.
At one point, concerns grew that miners’ production costs were much higher than the spot price of Bitcoin and that large sales would lead to a sharp drop in the price of BTC. Worse still, many may have to shut down their operations altogether because they are no longer financially viable.
Data from the period since May seems to confirm that massive volatility is on the way. As Arcane notes, one public miner, Core Scientific, sold around 12,000 BTC between May and July.
Although the trend showed signs of reversing last month, the price of BTC will need to go even higher to allow even the largest miners to resume operations.
Arcane analyst Jaran Mellerud explains:
“The public miners sold 158% of their bitcoin production in July, making it the third month in a row where they sold more than 100% of production.”
For context, in April 2022, miners’ Bitcoin was at an all-time high, thanks to years of savings of at least 60% of BTC received through block subsidies each month.
However, after subsequent sales, their balances are trending 30% lower and will only go higher until the monthly cost balance is restored.
“I expect the selling pressure to continue at between 100% and 150% of production unless something significant happens to the bitcoin price. This is equivalent to between 4,000 and 6,000 BTC per month,” Mellerud added.
BTC may have rallied 36% from its June low, but the pain will continue for miners.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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