Struggling Miners Offload $300M Worth of Bitcoin in One Day

Mining heavyweights offload more bitcoins to help cover operating costs.

More than $300 million worth of bitcoins were transferred out of a wallet in one 24-hour period last week, with the last few weeks alone accounting for the largest sales of bitcoins since Jan. 2021.

Pressure from soaring inflation and high energy prices has forced many miners to abandon the “HODL” perspective. Resignations of key executives at Compass Mining, increased borrowing by Bitfarms, and Sam Bankman-Fried offering to buy distressed mining companies are also signs of an industry in distress.

Bitcoin’s price, though up from a bottom of about $17.5K in June, is still 70% lower than Nov. 2021 highs of over $69K. While much of its precipitous decline has been arrested, miners’ margins industry-wide have dropped from 80% at bitcoin’s peak to 50% at the current price of around $22K.

Core Scientific sells 7K BTC

Texas-based Core Scientific sold at least 7202 bitcoins in June at around $23K per coin, while Bitfarms sold 3000 bitcoins to help strengthen its balance sheet. Core Scientific CEO Mike Levitt told CNBC that while the company mines cryptocurrency, it has to pay bills in dollars. It used some of the recouped funds amounting to $167 million to purchase new mining ASICs, computers purpose-built for mining cryptocurrency, and to expand the company’s data centers. Core also used the funds to service debt.

Small operators buckle under the pressure

The slide in bitcoin price and macroeconomic pressures also benefit more prominent players at the expense of small operators. When bitcoin fell 50% in 2014 from $500 at the end of 2013, many miners exited the industry as equipment became outdated and margins shriveled.

In an environment of low energy prices, economies of scale push out less efficient miners, leaving more of the global bitcoin hashrate (computing power per second) for the bigger companies to snap up. The global hashrate has decreased by 15% in the last month, making more room for companies like Core Scientific.

As the global hashrate decreases, the bitcoin algorithm reduces the difficulty of mining. This reduction in difficulty reduces the computing power needed to mine a single bitcoin, saving the larger companies money on energy usage.

Energy costs may also affect Celsius Network, the crypto lender that recently filed for bankruptcy, petitioned the judge at its bankruptcy hearing on July 14, 2022, to allow it to mine bitcoins to pay its customers. Celsius owns over 80500 mining ASICs worth roughly $750 million. At the current bitcoin price, Celsius would have to mine 53000 bitcoins to be able to pay clients back. It currently mines 14.2 bitcoin a day.

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The post Struggling Miners Offload $300M Worth of Bitcoin in One Day appeared first on BeInCrypto.

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