- Bitcoin miners are seemingly selling off their recently mined inventory at the $28,000 price point due to tightened profit margins.
- The escalating Bitcoin miner difficulty, marking a record high recently, has made mining increasingly competitive and frequently unprofitable.
Bitcoin is currently encountering considerable sell-offs at the $28,000 threshold, and crypto services provider Matrixport suggests miners might be the ones pulling the strings. In its latest report, Matrixport expresses suspicion that narrowing profit margins in recent weeks are prompting Bitcoin miners to liquidate their fresh inventory.
Bitcoin mining has gradually evolved into a high-stakes competition, rendering it unprofitable on several occasions, according to the report. This trend is chiefly attributed to the ongoing escalation in Bitcoin miner difficulty, a gauge of the ease with which miners can uncover a new Bitcoin block. Earlier this week, the difficulty level reached an all-time high.
Markus Thielen, the head of research, observes that
“at the current input cost and potential output revenue expectations, most of the machines produced before 2022 appear to be unprofitable.”
The unforgiving economics of Bitcoin mining are, thus, compelling miners to sell their stock at the prevailing market price instead of waiting for a potential uptick in the future.
Matrixport’s note further asserts that despite the current challenges, the potential for miners’ profitability remains promising. If Bitcoin prices experience a surge of at least 10%, profitability could potentially quadruple, presenting substantial upside potential for Bitcoin miners.
Understanding these market dynamics enables a broader comprehension of the factors affecting Bitcoin’s price movements. Matrixport’s observations underscore the critical influence that miner behaviour, driven by profitability pressures, can exert on Bitcoin’s price level. While current conditions might force miners into immediate liquidation, the potential for increased profitability with a modest Bitcoin price increase remains a key motivating factor.
