Bitcoin on-chain data shows miners offloading BTC as revenues shrink

Coin Metrics information likewise reveals a decrease in the one-hop supply metric of miners, which measures the quantity of Bitcoin stored in addresses that get coins from mining swimming pools. The metric taped a constant uptrend in miner holdings given that May 2023; nevertheless, the miners reversed their build-up pattern in the 2nd week of June.One-hop supply of Bitcoin miners. Source: Coin MetricsIncrease in mining difficulty and decreased Ordinals activityBitcoin mining trouble, which describes a step of how challenging it is to find a brand-new block in the Bitcoin blockchain network, reached an all-time high at the start of June. Bitcoin difficulty changes occasionally to guarantee that new blocks are added to the blockchain around every 10 minutes on average. When the networks calculation capacity boosts, it adjusts to make mining more hard and vice versa.The problem is adjusted every 2,016 blocks, which is roughly every 2 weeks, and is based on the overall computational power, or hash rate, of the network. The last modification happened on May 31, with a 3.39% boost in total difficulty.Bitcoin mining trouble. Source: Blockchain.comThe increase in Bitcoin problem lowers the revenues of miners, eating into their profitability and possibly increasing their losses. Moreover, the competitors among miners has increased considering that the last difficulty adjustment, with the networks hash rate rising to a new all-time high of 381 exahashes per second on June 11. The next problem adjustment due today will likely contribute to the selling pressure.Bitcoin Ordinals activity, which was accountable for a boost in miner income, decreased in May, leading to decreased profits for miners. The overall costs spent for Ordinal engravings on Bitcoin dropped to a two-month low, with trading volumes on nonfungible token markets revealing a similar trend.The seven-day typical earnings of miners, according to Glassnode information, dropped from a high of $33.9 million in May to $25.8 million at the start of June.The 7-day moving average of Bitcoin miner revenue (orange) and BTCs rate (black). Source: GlassnodeJune likewise marked the start of summertime, with hot temperature levels in the Northern Hemisphere putting a considerable load on some mining farms due to the increased expense of electrical energy. In 2022, the summer season heat waves triggered miners in Texas to temporarily close down operations. Reportedly, Texas represents around 15% of the mining capacity in the United States. The heat waves might worsen in 2023, leading to a slump in the networks mining hash rate.Related: Bitcoin miners have actually earned $50B from BTC block benefits, costs given that 2010Identifying miners stress levelsCurrently, the expense of producing Bitcoin for the existing mining hardware lies between $35,532 and $21,244. With Bitcoins price holding above $25,000, the downtrend in Bitcoins mining hash rate could be limited.However, if the circumstance aggravates over the mining and the summer boost without a proportional increase in the BTC cost, the market might fall back into capitulation mode, marked by sped up BTC selling and a reduced network hash rate.Bitcoin cost chart with production expense indicator. Source: TradingViewMoreover, while Bitcoins hash rate has actually continued to rise, Bitcoins hash cost metric– the market worth designated per system of hashing power– decreased considerably in May, recommending a cooldown in demand for mining hardware.According to an upgrade from Hashrate Index, the “hashprice [PH] is back below $70.00/ PH/day for the first time since mid-March” after touching an average of $82.23 per PH each day in May, a 14.8% decline.It remains to be seen how far the sell-off extends and whether or not Bitcoin Ordinals activity comes back in the meantime.This article does not contain financial investment advice or suggestions. Every investment and trading move involves danger, and readers should conduct their own research when making a decision.
This article is for basic details purposes and is not planned to be and must not be taken as legal or investment advice. The viewpoints, views, and thoughts revealed here are the authors alone and do not necessarily reflect or represent the views and viewpoints of Cointelegraph.

Coin Metrics data also reveals a decline in the one-hop supply metric of miners, which measures the quantity of Bitcoin saved in addresses that get coins from mining pools. The metric taped a constant uptrend in miner holdings because May 2023; nevertheless, the miners reversed their build-up pattern in the 2nd week of June.One-hop supply of Bitcoin miners. The total fees paid for Ordinal engravings on Bitcoin dropped to a two-month low, with trading volumes on nonfungible token marketplaces revealing a similar trend.The seven-day typical earnings of miners, according to Glassnode information, dropped from a high of $33.9 million in May to $25.8 million at the start of June.The 7-day moving average of Bitcoin miner income (orange) and BTCs price (black). The heat waves could worsen in 2023, leading to a decline in the networks mining hash rate.Related: Bitcoin miners have actually earned $50B from BTC block rewards, charges since 2010Identifying miners tension levelsCurrently, the cost of producing Bitcoin for the existing mining hardware lies between $35,532 and $21,244. With Bitcoins price holding above $25,000, the downtrend in Bitcoins mining hash rate could be limited.However, if the situation gets worse over the mining and the summertime cost boosts without an in proportion increase in the BTC price, the industry might fall back into capitulation mode, marked by accelerated BTC selling and a decreased network hash rate.Bitcoin rate chart with production cost sign.

Bitcoins on-chain information provides proof that Bitcoin miners are unloading their holdings. According to on-chain analytics firm Glassnode, “Miners have been sending a substantial amount of coins to exchanges.” Glassnode information shows Bitcoin (BTC) miners inflows to exchanges increased to a three-year high on June 3 to levels last seen during the bull market of early 2021.

Other Questions People Ask

What does Bitcoin on-chain data reveal about miners offloading BTC as revenues shrink?

Bitcoin on-chain data indicates that miners are increasingly offloading their BTC holdings due to shrinking revenues. The one-hop supply metric, which tracks Bitcoin stored in addresses receiving coins from mining pools, has shown a reversal in miner accumulation patterns since June. This trend suggests that miners are responding to decreased profitability and increased mining difficulty by selling off their assets.

How has the increase in Bitcoin mining difficulty affected miners' behavior according to on-chain data?

The rise in Bitcoin mining difficulty has significantly impacted miners' profitability, leading to a trend of offloading BTC. As the difficulty reached an all-time high, miners faced reduced revenues, prompting them to sell their holdings rather than accumulate. This behavior is reflected in the declining one-hop supply metric, indicating that miners are adjusting their strategies in response to challenging market conditions.

What role does Bitcoin Ordinals activity play in miners offloading BTC as revenues shrink?

Bitcoin Ordinals activity has historically contributed to miner income, but recent declines have exacerbated revenue shrinkage. The drop in fees for Ordinal engravings has led to lower earnings for miners, pushing them to offload BTC holdings. This decrease in activity is a critical factor influencing the current trend of miners selling rather than accumulating Bitcoin.

How does the current market situation affect the future of Bitcoin mining profitability?

The current market situation, characterized by high mining difficulty and reduced miner revenues, poses challenges for future profitability. If Bitcoin prices do not rise proportionally to the increasing costs of production, miners may face further financial strain. This could lead to a continued trend of offloading BTC and a potential decline in the network's hash rate as miners exit the market.

What insights can be drawn from the seven-day average earnings of Bitcoin miners?

The seven-day average earnings of Bitcoin miners have dropped significantly, from $33.9 million in May to $25.8 million at the start of June. This decline highlights the financial pressures miners are facing due to increased competition and operational costs. As earnings continue to fall, it is likely that more miners will choose to offload their BTC holdings rather than hold onto them, further impacting market dynamics.