Bitcoin Miners are Selling their BTC Assets over Reduced Profitability

Bitcoin miners are selling off their tokens as the price of Bitcoin is falling and the profit margins are shrinking.

Mining Bitcoin (BTC) has become less profitable as the price of the crypto has trended downwards, with popular machines like Bitmain's Antminer S9 becoming money losers at electricity prices of six cents per kilowatt-hour. Struggling Bitcoin miners who would prefer not to shut down their rigs can look to raise capital in the debt or equity markets and/or sell off bitcoin holdings. Bitcoin mining is the process of verifying and adding a new block (set) of transactions to the blockchain. Those who participate in the mining process (known as validators or miners) get a certain number of bitcoins for every block of transactions they successfully verify and add to the blockchain. Over the last fortnight, Bitcoin's mining difficulty has risen by nearly 5.56 percent, hitting a lifetime high of 30 trillion (Bitcoin mining difficulty is measured on a scale of 1 to infinity).

Bitcoin mining revenues fell in May by 21.6%, according to data compiled by The Block Research. Last month, miners brought in about US$906.2 million in revenue. Compared to October 2021, that's an even bigger drop of about 47%. Monthly revenues have generally decreased since, with a slight uptick in March.

Argo Blockchain (ARBK) plans to raise debt and sell some of its bitcoin to cover expenses, the company said in an analyst call for its first-quarter results. Core Scientific (CORZ), the world's largest miner by hash rate, has already sold some of its mined bitcoin this year and plans to continue doing so. Previously a confirmed HODLer, Riot Blockchain (RIOT) sold nearly half of its mined bitcoin in April after having also sold a sizable amount in March.

Bitcoin miners sell BTC rewards following dismal profits

Since May 11, Bitcoin has been oscillating around US$30K, with its lowest point being US$26,973 on May 12. Some hope began trickling in as the digital asset closed the month above US$30K. However, further positive expectations were quickly decimated after BTC was rediscovered below the US$30K mark.

At reporting time, the crypto king trades at US$29,907, having tumbled 5.4 percent in the last couple of hours. Since the current mining reward is 6.25 BTC, miners now get about US$186,918 per block mined. Compared to the over US$400,000 miners made in November last year.

BTC sell-Off

Other than selling off their Bitcoin reserves, miners are now looking into debt and equity markets as alternative income sources. Argo Blockchain is one of those following this route. Those selling off their mined BTC include Core Scientific – the world's largest miner by hash rate and Riot Blockchain. The latter, a previous staunch holder, disposed of a considerable stock of its BTC in March. The company did the same in April, where it sold off about 50 percent of its mined BTC.

Cathedra Bitcoin reported selling 235 Bitcoins in May to cover expenses and protect itself from further price declines. To add to its woes, Cathedra saw a 45 percent slash in its standard hash rate in April. This happened after its North Dakota site got hit by storms.

During its May earnings call, Marathon Digital suggested selling some of its Bitcoin. More recently, Digihost reported it disposed of some of its Bitcoin stashes today to cover energy costs.

Predictions For 2022

Bitcoin started 2022 at US$46,657.53. Given that important trading factors remain steady, the price prediction indicates that many expect Bitcoin to reach US$50,000 by the end of the year. Furthermore, a recent technological update, Taproot, will pave the way for massive improvements in terms of fee reduction, privacy, smart contracts, and the lightning network. With that in mind, Bitcoin's price could easily rise above US$100,000 in the near future. The predictions from websites CrypotNewZ and Coin Price Forecast show that Bitcoin (BTC) is expected to reach the price of US$126,127 by the end of 2025.