The Primary crypto asset, Bitcoin, has hit a monthly low of $65,000 as a result of several factors which include bitcoin miners selling off their assets at a rate never seen before in two months.
Bitcoin has dropped by 6.1% in the past week partly due to the activities of Bitcoin miners who are selling off their assets due to several factors which include lower mining rewards following the halving event earlier this year.
CryptoQuant reported that the amount of Bitcoin sold by miners in exchanges has hit a two-month high following factors like a reduced mining reward and lower transaction fees.
Bitcoin miners sell off rally
Bitcoin transfers from Bitcoin mining pool to Binance on June 9 hit a two-month high of 3000 BTC per hour. This was followed by miners selling over 1,200 BTC over-the-counter desks the next day marking the highest Bitcoin sell-off daily volume since March.
American-based mining companies with significant Bitcoin holdings are also selling off their assets frantically.
An example of such sell-offs is Marathon Digital selling over 1,400 BTC in June, representing 8% of its total holdings, a significant increase from the 390 BTC sold in May.
The Bitcoin miner’s sell-off rally is powered by a significant drop in mining rewards. Daily miner revenues have dropped to around $35 million, a 55% decrease from the $78 million peak in March.
In addition to this Transaction fees also dropped with daily fees now averaging around 65 BTC, down from 117 BTC before the halving.
High hashrate
In addition to the drop in mining rewards faced by crypto miners, Miners also face another unfavorable challenge known as high network hashrate. The hashrate for miners has only decreased by 4% since April.
The high hashrate poses a significant challenge to miners because it demands more computing power, energy, and time to validate transactions and add blocks to the blockchain, placing additional financial pressure on miners.
Bitcoins current hashrate is at 599 EH/s, slightly down from the pre-halving rate of 622 EH/s. Miners are currently dealing with high hashrate, reduced mining rewards, and growing competition all at once. These unfavorable conditions are making the mining industry less appealing and could have an adverse effect on the price of bitcoin.
What to know
- In crypto mining a hashrate measures how many guesses are submitted per second to the entire blockchain. A higher hashrate indicates the need for more computing power, increased energy costs, and longer verification and transaction times. This results in slower and more expensive Bitcoin mining.
- Hashrate can also be defined as the blockchain’s difficulty in mining Bitcoin, or the amount of computing power contributed to the network through mining.
