According to the latest report from Kaiko Research, forced selling by Bitcoin Miners is likely to continue ahead amid reduced rewards and lower network fees. Over the past two months following the Bitcoin halving event, Bitcoin miners have been divesting their holdings to cover their operation expenses.
Bitcoin Network Fees Tank By 90%
As per the Kaiko report, the Bitcoin network fees have collapsed by 90% in the last six months. While the Bitcoin network fee was $45 in January 2024, it has not come down to an average between $3 to $5.
Soon after the Bitcoin halving event, the network fees surged all the way to $150 for a very short period of time amid the massive surge in the NFT minting taking place on the Bitcoin blockchain. This was a short-term respite to the Bitcoin miners before the network fees headed significantly downwards.
Bitcoin miners are also facing growing pressure as block rewards have dropped from 6.25 BTC before halving, to 3.125 BTC post halving. On the other hand, mining costs have surged as the demand for computational power has increased.
At the same time, the Bitcoin price remaining almost flat and showing sideways consolidation has added to further woes. Also, there’s less bullish optimism among retailers or institutions with inflows into spot Bitcoin ETFs dropping significantly in comparison to the first quarter.
With the BTC price receiving little stimulus from other ends, the Bitcoin miners will have no option but to sell more of their holdings.
Also Read: Europe’s Bitcoin Mining Giant Northern Data Eyes A US IPO
Here’s How Bitcoin Miners Are Coping Up
Kaiko reported that one of the largest Bitcoin miners – Marathon Digital – had to sell 390 BTC during the months of May and plans for additional sales to stabilize its operations. This could push the BTC price even lower if other miners join the bandwagon. Currently, the immediate support for Bitcoin on the downside is $60,000. Losing this can trigger a BTC price drop to $57,000 and $54,000 subsequently.
Also Read: Bitcoin Price Slips Below $63K As Entity Dumps $114M BTC To Binance
Amid the Bitcoin mining profitability sinking, players like Marathon Digital also resorted to mining other PoW cryptocurrencies like Kaspa (KAS).
Kaiko also predicts that financial pressures will lead to mergers among miners aiming to streamline operations and enhance profitability. This trend of consolidation is expected to persist as the effects of Bitcoin halving continue to impact the industry.
For instance, Riot Blockchain attempted a hostile takeover of Bitfarms Ltd., illustrating the consolidation trend. Similarly, CleanSpark Inc. recently announced an all-stock acquisition of Griid Infrastructure Inc. for $155 million.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
