Bitcoin mining companies have been avoiding hoarding and instead liquidating a significant portion of their held assets in recent days. Typically, selling off large amounts of Bitcoin can lead to price declines, but this selling-off practice by miners is a regular occurrence and shouldn’t be considered unusual.
Miners have a responsibility to bring newly minted BTC into circulation. They do this in the form of a fixed reward, currently set at 6.25 BTC, for each block they validate and add to the Bitcoin network. While miners are rewarded in BTC for their efforts, they still need fiat currency to cover the often high operational costs associated with mining, such as machinery, electricity, and rent. Therefore, they frequently sell their Bitcoin holdings.
Usually, mining companies wait for a substantial increase in BTC price before selling their holdings. However, this hasn’t been the case in the current context. Data from CoinMarketCap reveals that the flagship cryptocurrency has dropped by over 2% since the beginning of the week at the time of writing.
A closer look suggests that the total income ratio from miners’ transaction fees witnessed a notable spike last week. Interestingly, this was also the time when BTC crossed the $28,000 mark for the first time in six weeks.
These developments might have filled miners’ treasuries. Consequently, fearing further price declines could impact their revenue, these players have quickly offloaded some of their reserves.
Despite a significant uptick in mining machine revenue in recent days, it’s essential to view it from a broader perspective. Since the unprecedented surge in early May, mining fees earned by miners have been gradually declining.
The market’s inherent price decline has limited the utilization of the entire blockchain, as seen before. As a result, transactions have reduced significantly, dragging down the amount miners earn from validating these transactions.