The public bitcoin miners listed on all of the public exchanges have reportedly sold all of their minted bitcoins in 2022. Experts believe this action will eventually lead to a negative impact on the price of bitcoin.
In the last quarter of 2022, mining companies have significantly reduced the number of bitcoins they receive. This is particularly due to the consequences of the collapse of cryptocurrency exchange FTX, which left the entire crypto industry bleeding.
Most Miners Have Shut Down Because Of Bad Market
Furthermore, the majority of the miners have shut down their machines due to the brutal bear market eating the profit, leading to further difficulty in mining a bitcoin block, according to the latest adjustments the difficulty in mining a block fell by 7.32%.
A senior research analyst from the blockchain research Messari, Tom Dunleavy revealed statistical information in a tweet from January 1 to November 30. The information reveals a group of bitcoin companies, altogether sold off almost 40,300 bitcoins of the 40,700 bitcoins they mined.
The senior analyst suggests that the constant selling of newly mined bitcoins by these companies rapidly impacts the downward pressure of the price of the bitcoin.
The mining companies that are responsible for the decrease in the price of bitcoin in a way include Core Scientific, Riot, Bitfarms, Cleans Park, Marathon, Hut8, HIVE, Iris Energy, Argo, and Bit Digital.
The senior analyst added that the bitcoin sell-off helps to build a good profile to be bullish on the Ethereum-bitcoin ratio trade. Yet one has sellers to raise the capital where the other one does not, thus it is pretty straightforward for one to keep the price running.
Although other factors are highly influential too. Meanwhile the largest public bitcoin company Core Scientific filed for bankruptcy last week. The argo industries may follow the same in the coming weeks.
Compute north, a mining host company that hosted machines for the second largest public miner Marathon Digital has already filed for chapter 11 back in September.
During the initial stage of covid energy prices dropped due to the lockdown and other measures which led miners to mine at fewer rates. As the countries relaxed their covid restrictions, day-to-day activities began to increase the energy demand thus leading to the spiking of energy prices.
The rising of energy prices further escalated due to the development of war between Russia and Ukraine, as the country was previously responsible for supplying 12% of the world’s oil supply and supplied almost 40% of Europe’s total gas consumption.
The rising electricity cost has widely eaten the profit of customers. Most mining companies often host their machines at other companies’ facilities. Thus, mining companies are required to include power brokerage agreements.
However, many of the hosting facilities have failed to keep the negotiated rate in the long term, which led to skyrocketing rates in 2022 so much that the miners were near the breakdown costs.
The soaring energy prices hit a historical high in 2022, eating away the profits of the bitcoin miners, who require a massive amount of electricity to power their machines and solve their mathematical data to continue transactions and all while creating new tokens.
Another meltdown for the miners is the declining pressure of the crypto market, which all started with the collapse of Terra’s algorithmic stablecoin UST, followed by another blow to the crypto exchange giant FTX, currently filing bankruptcy due to the illegal activities done by their former co-founders.
With all these incidents, cryptocurrencies are on a downward trend and struggling to recover. The prices of bitcoin further plunged to $16,000 from $20,000 with the collapse of FTX. Currently, bitcoin is trading at around $16,560 down by 0.21%.