The drop in the bitcoin (BTC) price below $60,000 in early June hit not only investors but also miners. As CryptoQuant analyst Darkfost noted, at this level cryptocurrency miners once again began to sell their coins more actively to cover costs.
Miners were already going through tough times. Since the end of last October, the network's hashrate — its total computing power — has fallen by about 28%. This indicates that some mining participants have cut back or redirected their operations in order to reduce costs.
Why miners are forced to sell
The decline in power also brought about a correction in mining difficulty — by about 20% over the same period. Difficulty drops, having barely produced a new block, and it automatically adjusts to the network's power.
To cover operating costs, miners are often forced to sell bitcoins, and not always at an opportune moment. This is clearly visible in their inflows to the Binance exchange. In February, when the BTC price first went below $60,000, miners began selling noticeably more actively than usual.
On February 5 alone they sent more than 24,000 BTC to Binance, and the monthly average rose from about 5,000 to more than 8,000 BTC. The sell-off in a falling market only intensified the pressure on the price.
The same picture repeated in June
When bitcoin again dropped to $60,000 in early June, the story repeated itself. For more than four days in a row, inflows from miners to Binance exceeded 10,000 BTC per day, and at their peak reached 12,800 BTC. The monthly average rose from 4,700 to 7,100 BTC.
The main reason is the unprofitability of mining. With an estimated production cost of around $76,000 per coin and a bitcoin price of around $65,000, most miners are now operating at a loss.
As a result, many of them are forced to sell their coins to cover operating costs. The volumes of such sales can be large enough to noticeably affect the price of the leading cryptocurrency.
Source: BeInCrypto
