Data from blockchain analytics firm CryptoQuant has shown that miners are rapidly offloading their Bitcoin holdings, with 14,000 BTC being moved out of wallets belonging to miners in a single 24-hour period.
In the last few weeks, bitcoin miners have offloaded the largest amount of BTC since January 2021 in a phenomenon some are calling “miner capitulation,” in which these miners are selling their coins to cover ongoing expenses.
Miners are struggling over lower bitcoin prices and higher energy costs, which force them to sell their BTC holdings. Citi analyst Joseph Ayoub wrote in a note earlier this month:
“Given rising electricity costs, and bitcoin’s steep price decline, the cost of mining a bitcoin may be higher than its price for some miners.”
A recent report from Coinbase has revealed that various miners moved from raising capital in equity to raising using debt, in part through loans secured by their own mining equipment. The value of this type of equipment has been dropping, further pressuring miners.
The report details that among the top 28 public mining companies, which represent 20% of Bitcoin’s hashrate, around 13,000 BTC has been sold so far this year, representing 19% of their reserves.
In total, Coinbase noted that all bitcoin miners hold around 800,000 BTC, meaning public miners’ holdings represent 6.8% of the total. Nevertheless, the firm estimated that even if BTC dropped to $10,000, they would still have reserves to last around 120 days, liquidating 16 BTC per day from their reserves.