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Some cryptocurrency miners capitulate after moving $300 million worth of bitcoin in one day

Rising energy costs are squeezing miners’ profit margins.
| CryptoPress

Lower bitcoin prices and rising energy costs are squeezing miners’ profit margins, so some are selling bitcoin at current levels to limit industry volatility and protect their bottom line.

Research from CryptoQuant reveals that miners are rapidly selling bitcoins.

In a single day, miners moved 14,000 bitcoins, or $300 million at the current price, from their wallets. In the past few weeks, miners sold the most bitcoins since January 2021.

The research reveals that miners are rapidly selling bitcoin. 14 000 bitcoins, worth more than $300 million at their current price, left miners’ wallets in 24 hours at the end of last week. Miners have unloaded the most bitcoins since January 2021. “Miner capitulation” means that miners are selling their bitcoins to fund mining expenses.

Bitcoin’s price is around $23,000, up 3% in 24 hours. Bitcoin has fallen more than 70% from its all-time high of $69,000 in November 2021.

As the conflict between Russia and Ukraine continues, inflation and oil prices soar.

“Reports of capitulations by mining companies and miners using their equipment as collateral could put the bitcoin mining sector under pressure,” the paper said.

U.S. Dollar Expenses

Miners have dollar-denominated costs, expenses, and liabilities. Core Scientific, a U.S. cryptocurrency company, sold virtually all of its bitcoin in June. “Bitcoin miners must pay expenses”, says CEO Mike Levitt.

Large-scale miners, such as Core Scientific, have less competition from hobbyists and smaller companies when energy costs are low.

“As prices decline, fewer efficient miners leave the network, reducing the overall hashrate,” Levitt said.

The hashrate, the processing power of all bitcoin miners, has plummeted 15% in a month. Large-scale miners that can withstand the drops will benefit.

“The energy cost of each bitcoin generated goes down.”

Mike Levitt

As less efficient miners leave the network and the hashrate drops, the remaining computers will become more productive.

Levitt claims bitcoin mining is still viable, with industry-wide margins of 50%. It peaked at 80%. “As prices decline, fewer efficient miners leave the grid, reducing total hashrate,” Levitt said.

Photo: Daniel Hatcher on Unsplash.

© 2022 Cryptopress. For informational purposes only, not offered as advice of any kind.

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