Investors, Alert! Bitcoin Under Siege As Miners Sell Off Holdings 

Investors, Alert! Bitcoin Under Siege As Miners Sell Off Holdings 

Time Stamp: May 9, 2023 5:14 AM
Source Node: 2638350

Recent data from Glassnode indicates a surge in Bitcoin (BTC) miner outflow, hitting an 11-month peak of 1.104. This level has not been seen since June 16, 2022, when it reached 1.068. The spike in miner outflow signals that BTC miners are offloading their holdings at the fastest pace in almost a year.

The Cause for Miner Sell-Off

While the exact cause for the negative sentiment among miners is unclear, several factors could be at play. One possible explanation is the recent suspension of Bitcoin (BTC) withdrawals by Binance due to transaction congestion. 

Another reason could be that miners are capitalizing on their holdings as miner revenue hits a yearly high. Data from Blockchain.com reveals that on May 8, 2023, Bitcoin’s (BTC) miner revenue reached $41,744, a level not seen since April 2022. Fearing a potential decline in revenue, miners might be cashing in on their BTC while it’s still profitable.

Related: Top Reasons Why Binance is Seeing Massive Bitcoin Outflow – Coinpedia Fintech News

A New Source of Revenue

Interestingly, for the first time since 2017, some Bitcoin (BTC) miners are earning more by processing transactions on the blockchain than by minting new BTC. This change could bring a silver lining to the beleaguered industry, which has faced numerous challenges lately, including multiple bankruptcies.

The Mining Profitability Equation

Bitcoin miners typically profit in two ways: creating new BTC through complex calculations and processing transactions on the network. As intended by the system’s design, the former has become less lucrative over time. Periodically, the mining reward is halved, currently standing at 6.25 BTC, and is set to decrease again next year.

This decline poses a potential long-term threat to mining profitability. Eventually, the mining reward could become insignificant, and ultimately disappear once all BTC has been mined (likely more than a century from now). Consequently, the recent spike in earnings from processing transactions could be a welcome development for the industry, especially considering the hardships faced by miners during the ongoing crypto downturn.

Also Read: Bitcoin Price Prediction 2023, 2024, 2025, 2026 – 2030

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