The signs of miner capitulation in the bitcoin market are becoming more apparent as the cryptocurrency struggles to maintain its position above the $70,000 mark. Recent data from CryptoQuant reveals that the flow of bitcoin leaving miners’ wallets for exchanges, typically indicating a selling event, hit a two-month high over the weekend. Moreover, miner selling through over-the-counter desks recorded its largest daily volume since late March, further pointing towards a potential trend of capitulation among miners.
Analyst Mike Colonnese from H.C. Wainwright highlighted the challenges faced by miners post-halving, stating that miners are now competing for half of the bitcoins they were mining less than two months ago. Despite rising transaction fees offering some relief, mining economics have effectively dropped by 45% compared to pre-halving levels. As a result, miners are forced to sell off some of their bitcoins to cover operating expenses and capital expenditures.
The hourly transfer of bitcoin from miners to exchanges surged to over 3,000 bitcoins on June 9, followed by the sale of 1,200 bitcoins on OTC desks the next day. This increased selling pressure caused the price of bitcoin to drop to around $66,000 on June 11. Daily bitcoin miner revenues have plummeted by 55% from their peak in March, mainly due to decreased transaction fees. The total daily transaction fees on the Bitcoin network are over 44% lower post-halving, despite record-high transactions on the network.
Despite the drop in miner revenues, the Bitcoin network’s hash rate has remained relatively stable since the halving in April. This stability implies that the same amount of computing power is now competing for fewer block rewards, putting additional strain on miners’ profitability. Large publicly traded mining companies like CleanSpark and Iren are faring well after the halving, with estimated gross margins exceeding 50% at a bitcoin price of $70,000. However, smaller bitcoin companies with less efficient operations and higher costs are struggling to stay afloat and may face challenges in the coming months.
As the bitcoin market grapples with the risk of miner capitulation, it is essential for miners to adapt to the changing landscape. While larger mining companies may have some breathing room, smaller players will need to navigate carefully to survive in the current environment. The future outlook for miners hinges on several factors, including bitcoin price movements, transaction fee dynamics, and overall market conditions. Only time will tell how miners will weather the storm and emerge stronger on the other side.