The highly volatile price of Bitcoin has devastated the majority of the crypto market and is now dragging miners down with it.
Miners are suffering from rapidly decreasing profit margins, despite being widely regarded as the Bitcoin network’s foundation and most resilient players.
Bitcoin mining difficulty is currently just 1% below its all-time high, forcing a large percentage of miners off the network.
Mining profitability is about to hit a low point, as mining revenue per terra hash fell below $5,000 at the start of September.
Miners were forced to sell their Bitcoin holdings in large numbers due to increased mining difficulty and decreasing profitability.
Since July, when the total Bitcoin supply held in miner addresses peaked at 1.84 million BTC, miners have sold over 12,000 BTC.
According to data, a similar capitulation occurred in November 2021, when Bitcoin reached an all-time high. Miners sold around 30,000 BTC at the time. If miners continue to fall in line, we could see an even bigger sell-off in the coming weeks.
While hash ribbons indicate that the worst of the capitulation has passed, shrinking miner balances suggest otherwise.
However, the massive sell-off over the last two months may be beneficial to Bitcoin in the long run.
While brutal, mining profitability fluctuations purge the network of unprofitable operations and weak miners unable to withstand the volatility.
When the market returns to normal, the Bitcoin network will be left standing on the shoulders of the most resilient and profitable miners, fortifying it for future cycles and volatility.
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