Crypto mining giant Bitfarms recently sold 3,000 BTC to improve liquidity.
Bitcoin’s price dip and spiking electricity prices have forced miners to sell BTC assets at a loss to remain ‘operational’.
Bitcoin mining, once known as one of the most profitable businesses, is now going through a rough patch. Amid rising global inflation, increasing energy prices, the crypto winter and a competitive environment, Bitcoin miners are finding it difficult to remain in business.
While some of the lesser-known names have already closed their operations, leading players are forced to sell their BTC assets to keep the operations going. Bitcoin miners, known for their ‘HODL’ strategy, have now started dumping their digital assets. According to the data published by CoinMetrics, Bitcoin miners collectively own approximately 800,000 coins, a number that is 300% more than the collective Bitcoin holdings of MicroStrategy, Tesla, Galaxy Digital and Square.
Electricity prices across the US, home to some of the world’s largest mining companies, have increased sharply in the past few months. The price of Bitcoin, on the other hand, has dropped by almost 70% in the last seven months. These two factors have caused a major drop in the profitability of BTC miners. According to Bitinfocharts, the profitability of Bitcoin miners has slumped by more than 80% since November 2021. During the same period, the network difficulty has climbed substantially.
The Game of Survival
The recent scenario across the crypto market is making it difficult for leading BTC miners to survive without ‘adjusting’ their ‘HODL’ strategy. Islam Shazhaev, the CEO of OneBoost, said that selling Bitcoin at a loss is still a better option to survive than leaving the crypto mining industry.
“With rising energy costs, crypto miners will typically have to spend more money to keep their rigs online. This creates a challenging situation as many have to put up their BTC holdings for sale to cover costs. Selling their Bitcoin at this time will imply a massive loss on the part of the miners, particularly the older ones considering prices are still trading well below $25,000. Still, it may help them stay in business for as long as the entire industry will cruise back into profitability. With the current situation, miners will rather sell at a loss than quit mining altogether,” Shazhaev said.
Balanced Approach
In the current scenario, a balanced approach is required by Bitcoin miners to survive the crypto winter, which includes cost-cutting initiatives, a measured reduction in operations and the selling of digital assets to improve liquidity.
“It would be wrong to approach this season like it is ‘business as usual’. Crypto miners can survive this crypto winter provided they will be willing to adhere strictly to cost-cutting measures and adopt proven economic strategies that can help cushion their businesses against the risks inherent in periods of inflation,” Shazhaev explained.
Barnabas Goh, the Chief Marketing Officer at Zonda Global, believes that the reduction in operations will bring the hash rate and mining difficulty down. “As always it’s about achieving a balance that considers profit, people, place and purpose and that is not an easy process by any means, but something we as stewards of the industry and the world need to contend with, and hopefully one day overcome together,” Goh said.
Bitcoin Selling
According to the data compiled by Arcane Research, the ‘HODL’ ambitions of BTC miners fell apart in May 2022 as leading players sold almost 100% of their BTC production during the last month.
The recent selling trend and rising global inflation indicate a tough road ahead for prominent Bitcoin miners in the industry. Cost-cutting and a substantial reduction in operations have forced some of the Bitcoin miners to cut jobs. With declining Bitcoin holdings, it will be difficult for small and medium-sized miners to remain operational if the price of BTC stays below $20,000 for a longer period.
Bitcoin mining, once known as one of the most profitable businesses, is now going through a rough patch. Amid rising global inflation, increasing energy prices, the crypto winter and a competitive environment, Bitcoin miners are finding it difficult to remain in business.
While some of the lesser-known names have already closed their operations, leading players are forced to sell their BTC assets to keep the operations going. Bitcoin miners, known for their ‘HODL’ strategy, have now started dumping their digital assets. According to the data published by CoinMetrics, Bitcoin miners collectively own approximately 800,000 coins, a number that is 300% more than the collective Bitcoin holdings of MicroStrategy, Tesla, Galaxy Digital and Square.
Electricity prices across the US, home to some of the world’s largest mining companies, have increased sharply in the past few months. The price of Bitcoin, on the other hand, has dropped by almost 70% in the last seven months. These two factors have caused a major drop in the profitability of BTC miners. According to Bitinfocharts, the profitability of Bitcoin miners has slumped by more than 80% since November 2021. During the same period, the network difficulty has climbed substantially.
The Game of Survival
The recent scenario across the crypto market is making it difficult for leading BTC miners to survive without ‘adjusting’ their ‘HODL’ strategy. Islam Shazhaev, the CEO of OneBoost, said that selling Bitcoin at a loss is still a better option to survive than leaving the crypto mining industry.
“With rising energy costs, crypto miners will typically have to spend more money to keep their rigs online. This creates a challenging situation as many have to put up their BTC holdings for sale to cover costs. Selling their Bitcoin at this time will imply a massive loss on the part of the miners, particularly the older ones considering prices are still trading well below $25,000. Still, it may help them stay in business for as long as the entire industry will cruise back into profitability. With the current situation, miners will rather sell at a loss than quit mining altogether,” Shazhaev said.
Balanced Approach
In the current scenario, a balanced approach is required by Bitcoin miners to survive the crypto winter, which includes cost-cutting initiatives, a measured reduction in operations and the selling of digital assets to improve liquidity.
“It would be wrong to approach this season like it is ‘business as usual’. Crypto miners can survive this crypto winter provided they will be willing to adhere strictly to cost-cutting measures and adopt proven economic strategies that can help cushion their businesses against the risks inherent in periods of inflation,” Shazhaev explained.
Barnabas Goh, the Chief Marketing Officer at Zonda Global, believes that the reduction in operations will bring the hash rate and mining difficulty down. “As always it’s about achieving a balance that considers profit, people, place and purpose and that is not an easy process by any means, but something we as stewards of the industry and the world need to contend with, and hopefully one day overcome together,” Goh said.
Bitcoin Selling
According to the data compiled by Arcane Research, the ‘HODL’ ambitions of BTC miners fell apart in May 2022 as leading players sold almost 100% of their BTC production during the last month.
The recent selling trend and rising global inflation indicate a tough road ahead for prominent Bitcoin miners in the industry. Cost-cutting and a substantial reduction in operations have forced some of the Bitcoin miners to cut jobs. With declining Bitcoin holdings, it will be difficult for small and medium-sized miners to remain operational if the price of BTC stays below $20,000 for a longer period.
Bilal Jafar holds an MBA in Finance. In a professional career of more than 8 years, Jafar covered the evolution of FX, Cryptocurrencies, and Fintech. He started his career as a financial markets analyst and worked in different positions in the global media sector. Jafar writes about diverse topics within FX, Crypto, and the financial technology market.
Australia Gears Up for Bitcoin ETFs: ASX Leads the Charge
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Looking to expand your network in #Africa?
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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