Bitcoin Miners Forced to Continue Selling BTC as Network Fees Crash by 90%
Forced sell-offs by Bitcoin miners are likely to continue due to decreasing rewards and low network fees, according to a recent report from Kaiko Research. Over the past two months following the Bitcoin halving, Bitcoin miners have been selling off their assets to cover operational expenses.
Bitcoin Network Fees Tank at 90%
According to a Kaiko report, Bitcoin network fees have collapsed by 90% in the last six months. The Bitcoin network fee was $45 in January 2024, but has yet to drop to an average of $3 to $5.
Shortly after the Bitcoin halving, network fees briefly rose to as high as $150 amid a massive surge in NFT minting on the Bitcoin blockchain. This was a short-term respite for Bitcoin miners before network fees dropped significantly.
Bitcoin miners are also facing increasing pressure as block rewards have dropped from 6.25 BTC before the halving to 3.125 BTC after it, while mining costs have also increased as demand for computing power has increased.
At the same time, the Bitcoin price has remained almost flat and has been showing sideways consolidation, causing more distress. There is also less bullish optimism among retailers or institutions as inflows into spot Bitcoin ETFs have dropped significantly compared to Q1.
With the BTC price receiving little incentive from other extremes, Bitcoin miners will have no choice but to sell most of their assets.
Also Read: Europe’s Bitcoin Mining Giant Northern Data Eyes US IPO
Here’s How Bitcoin Miners Are Coping
Marathon Digital, one of the largest Bitcoin miners, was forced to sell 390 BTC during May and is planning to make additional sales to stabilize its operations, Kaiko reported. This could push the BTC price even lower if other miners jump on the bandwagon. The immediate downside support for Bitcoin is currently at $60,000. Losing that could trigger a subsequent drop to $57,000 and then $54,000.
Also Read: Bitcoin Price Drops Below $63K as Entity Transfers $114 Million BTC to Binance
As the profitability of Bitcoin mining declines, players like Marathon Digital have also resorted to mining other PoW cryptocurrencies like kaspa (KAS).
Kaiko also predicts that financial pressures will lead to mergers among miners aimed at streamlining operations and increasing profitability. This consolidation trend is expected to continue as the effects of the Bitcoin halving continue to impact the industry.
For example, Riot Blockchain demonstrated its propensity for consolidation by attempting a hostile takeover of Bitfarms Ltd. Similarly, CleanSpark Inc. recently announced the acquisition of all shares of Griid Infrastructure Inc. for $155 million.
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Bhushan is a FinTech enthusiast and has a good grasp of financial markets. His interest in economics and finance draws his attention to the emerging Blockchain Technology and Cryptocurrency markets. He is a constant learner and motivates himself by sharing the knowledge he acquires. In his spare time, he reads thrillers and sometimes explores his culinary skills.
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