Bitcoin miners poised to offload BTC as mining revenue plunges: Kaiko data
Bitcoin miners are feeling pressure to sell their holdings as their revenues drop following Bitcoin’s latest halving, according to Kaiko.Miners’ revenues fell in May as bitcoin mining yielded smaller token rewards and transaction fees dropped.
A bitcoin selloff likely looms large as the token’s miners face pressure to offload their holdings amid a steep revenue drop-off, crypto research and analytics firm Kaiko’s data shows.
Bitcoin miners largely rely on two revenue streams: mining rewards and transaction fees.
However, both businesses are bringing in more modest returns in recent weeks.
April’s halving event, the long-ago coded reduction in mining rewards to 3.125 BTC from 6.25 BTC, posed a unique headwind for miners trying to cover their overhead.
“The halving has typically been a selling event for Bitcoin miners as the process of creating new blocks incurs significant costs, forcing miners to sell to cover costs,” Kaiko researchers said in a new report.
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Meanwhile, miners’ other revenue stream — the transaction fees they charge to process traders’ transactions more quickly —is also drying up. In the first week of May, miners' profits from transaction fees remained lower than their earnings from mining bitcoin.
A potential bitcoin sell-off could have a major impact on the crypto market, especially at a time of lower market liquidity. Mining companies such as Marathon Digital, which holds $1.1 billion worth of bitcoin, need only sell a fraction of its holdings to create dramatic market movements, according to Kaiko.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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