Back on the first day of December, when Bitcoin had not yet crossed the $40,000 mark, miners took action to sell Bitcoin.
More than 12,500 BTC were sold in early December, a figure that surpassed the selling activity during the period when Bitcoin bottomed out below $16,000. It can be assumed that miners sell when the price of BTC drops too deeply or when BTC experiences significant price increases to cover their mining costs.
What’s interesting is that the amount of BTC sold by miners at the beginning of December exceeded the amount sold during the period when BTC reached its all-time high of $69,000. It seems that Bitcoin miners are acting hastily, possibly due to the belief that Bitcoin may not experience the same level of rapid price increases as before.
Regardless of their reasons, Bitcoin miners have been selling more BTC in 2023 than in previous years, as indicated by the high data column in the chart for the year.
As mining difficulty increases, miners incur higher costs to secure block rewards through transaction confirmations. However, in some periods, these costs are quickly offset by the rising BTC price and increased block rewards. Miners may currently be in such a phase.
According to Julio Moreno, Head of Research at CryptoQuant, the Bull-Bear market cycle indicator is showing the first signs of a hot price increase since July (shown in dark pink, overheated bull). Alongside this, block rewards are increasing much faster than mining difficulty (shown in dark pink, miners extremely overpaid).
Another reason contributing to the rapid increase in block rewards is the Ordinals wave. Direct transactions and BRC-20 tokens executed on the Bitcoin blockchain have brought significant profits to miners. However, on the flip side, this has led to unreasonably high transaction fees and criticism from developers who have dedicated a lot of effort to the Bitcoin network.
Observing the data on transaction fee proportions on the Bitcoin network, Dune’s data shows that some days the transaction fee ratio of BRC-20 accounts for 40% to 50% of the total daily fees.
In response to this phenomenon, Bitcoin Core developers have recently proposed upgrading Bitcoin with the aim of eliminating Ordinals. This situation places Bitcoin miners at a crossroads, weighing their short-term individual interests against the long-term benefits of the network.