Bitcoin miners are currently facing their longest sell-off phase in seven years, as indicated by on-chain data. Analysis by CryptoSlate’s lead analyst James Van Stratten on June 17 reveals that the Bitcoin market has been experiencing a miner capitulation for 33 days, a trend historically lasting an average of 41 days.
Miner capitulation occurs when Bitcoin miners are compelled to shut down their operations or sell their BTC to survive, signaling unprofitable business conditions. The hash rate has decreased by over 12% since its peak on May 26, with the upcoming difficulty adjustment on June 20 expected to be slightly positive, according to data from Newhedge.
The primary challenge affecting miner profits recently was the Bitcoin halving in April, reducing the fixed Bitcoin block subsidy from 6.25 BTC to 3.125 BTC per block. As a result, the mining industry’s average daily revenue has dropped from approximately 900 BTC to about 450 BTC since April 19.
Despite network fees serving as a revenue source for industry players, they are relatively low, especially after the post-halving fee frenzy subsided. This has intensified the competition in mining, with only the most efficient facilities able to operate profitably.
Miners who cannot sustain profitability have been selling their coins, with over 3000 BTC distributed from Bitcoin miner addresses in the past month, continuing a trend of net miner outflows since October 2023, totaling 30,000 BTC sold by miners during that period.
Stratten noted that this ongoing distribution phase for miners is the longest since 2017, presenting additional challenges. However, miners still collectively hold over 700,000 BTC, surpassing the combined ownership of BlackRock and Grayscale’s Bitcoin ETF products.
Despite initial assumptions that large, publicly traded mining firms would weather the halving well, on-chain data suggests that even industry leaders are selling their coins as profit margins tighten. A report by CryptoQuant last Wednesday revealed that miners had sold 1200 BTC in over-the-counter trades, with Marathon Digital, the largest publicly traded miner, initiating most of the sales.
Overall, the current situation indicates a challenging period for Bitcoin miners, with competition intensifying and profit margins decreasing even for prominent players in the industry.
