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Bitcoin Miners Selling 135% of Their Profits: Details

Mon, 11/28/2022 - 12:30
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Arman Shirinyan
Miners create large portion of existing pressure on Bitcoin, causing greater pressure on first cryptocurrency's price
Bitcoin Miners Selling 135% of Their Profits: Details
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The tumbling of the cryptocurrency market and the problematic state of Bitcoin mining put enormous pressure on cryptocurrency miners who had no other choice but to liquidate their holdings and sell 100% of all issued BTC to cover their enormous losses.

According to Glassnode, the industry remains under "immense financial stress" for the aforementioned reasons. In their study, Glassnode and CryptoSlate found out that miners are distributing around 135% of mined coins.

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A value above 100% suggests that miners are selling more than they issued recently. As the data suggests, Bitcoin miners are dipping into their treasuries. By selling their reserves, they are trying to cover rising electricity costs that effectively push the profitability of mining operations down.

Unfortunately, the use of reserves is a sign of a deep crisis in the industry. If the bear market gets aggravated and drags on for a few more months, we might see more liquidations in the mining industry.

Practically, Bitcoin mining today is a survival of the fittest game as mining difficulty is directly related to the hashrate of the network. If more miners get underwater, we will see a difficulty decrease, which will lead to the rebalancing of the market.

However, pain for miners might become relief for the cryptocurrency market. Considering the current dynamic, miners provide enormous pressure on BTC and the rest of the market, respectively.

During the Chinese mining and crypto crackdown, the BTC network saw the biggest drop in mining difficulty in its history, which later became a foundation for the massive bullrun that led BTC to the $69,000 price level. At press time, Bitcoin is trading at $16,198, with a 1.39% loss in the last 24 hours.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.