Bitcoin miners are currently experiencing a prolonged period of selling that has not been seen since 2017, according to on-chain data analysis. The market has been in a state of miner capitulation for 33 days, with historical trends suggesting this phase typically lasts around 41 days.
Miner capitulation occurs when miners are forced to shut down their operations or sell their Bitcoin in order to remain profitable. The recent drop in hash rate by over 12% since its peak on May 26 has been a significant factor in this sell-off period. The upcoming difficulty adjustment on June 20 is expected to be slightly positive, according to data from Newhedge.
The reduction in the Bitcoin block subsidy following the April halving has also impacted miner profits, with the industry’s average daily revenue decreasing from ~900 BTC to ~450 BTC. While network fees still contribute to revenue, they are minimal compared to pre-halving levels. This has led to intense competition in the mining sector, with only the most efficient operations able to stay profitable.
Over the past month, more than 3000 BTC has been sold by miners, continuing a trend of net outflows since October 2023. This prolonged selling phase is the longest observed since 2017, presenting additional challenges for miners. Despite this, miners still collectively hold over 700,000 BTC, surpassing the combined holdings of BlackRock and Grayscale’s Bitcoin ETF products.
Even large publicly traded mining firms are feeling the pressure, with data showing that industry leaders are also selling their coins as profit margins tighten. Marathon Digital, the largest publicly traded miner, has initiated significant over-the-counter trades selling 1200 BTC, as reported by CryptoQuant last week.
The current landscape for Bitcoin miners is highly competitive and challenging, with only the most efficient and resilient operations able to weather the storm.
