It seems that Bitcoin miners are experiencing a significant increase in profitability recently, leading to a potential decrease in selling pressure from this group of market participants. Following the rally of Bitcoin to the $69,000 range, the hashrate of the Bitcoin network has shown signs of recovery. This recovery is crucial as it is often associated with a sustained rally in the price of Bitcoin. The current drawdown from the all-time high of the hashrate is now at 3%, a significant improvement from the 8% experienced on July 9.
In addition to the hashrate recovery, miners’ profitability has also been on the rise. Since the Bitcoin halving in April, miners are now being paid more than they have been in recent times. The Miner Profit/Loss Sustainability metric reveals that miner revenues are growing relative to the mining difficulty. This increase in profitability suggests that miners may not need to sell off their holdings to cover operational costs, resulting in less selling pressure on Bitcoin.
The recent rally in Bitcoin has caused daily miner revenues to surge by approximately 50%. This increase is a stark contrast to the year-to-date low of $22 million seen earlier this year. Currently, total daily miner revenues are hovering around $32 million, indicating a substantial improvement. As profitability and revenues continue to rise, Bitcoin outflows from miners have remained relatively low compared to earlier in the year. Daily miner outflows have decreased to the range of 5,000-10,000 BTC in July, down from the 10,000-20,000 BTC seen when BTC rallied to $70,000 in early March.
Interestingly, there has been a noticeable shift in Bitcoin holdings among miners. Larger mining entities have been increasing their holdings, while smaller firms have been selling off their bitcoins. The total balance of large miners has seen an increase from 61,000 BTC to 65,000 BTC since the beginning of the year. In contrast, small miners’ balance has decreased from 59,000 BTC to 51,000 BTC over the same period. This trend suggests that smaller miners have been more inclined to sell off their holdings, particularly after the halving event.
Despite the positive developments in profitability and revenues for miners, there are still concerns about potential risks. CryptoQuant has warned that miners could face the risk of remaining at “depressed levels” with regard to fees, as their profitability remains heavily dependent on the price of Bitcoin. This warning highlights the need for miners to carefully assess their operational costs and overall risk exposure in the volatile cryptocurrency market.
