Following Bitcoin’s steep price collapse starting in May, the mining industry has been significantly less profitable. Data has now surfaced that miners sold more than 100% of the Bitcoin they generated last month.
According to a report from Arcane Research published on Monday, miners have held on to most of their accumulated coins since the beginning of the year. Selloffs were only roughly 30% of productions from January through April.
That changed quickly in May, with the number of Bitcoin sold by public miners soaring above 4000 in that month alone. That’s more than all of the Bitcoin these firms produced in that time, suggesting that miners are digging into their HODL position.
“Ironically, their hodl ambitions make them sell their precious bitcoin during bear markets since that is when the market forces them to sell,” reads the report.
Miners are the only natural net sellers of Bitcoin. Through the expenditure of computational energy (proof of work), miners are the sole producers of the primary cryptocurrency. However, the energy costs intrinsic to this process mean some of their holdings must be sold off with time, putting more supply on the market.
Arcane predicts that miners are selling off even harder in June, given that markets have collapsed even further. Bitcoin’s price dropped as low as $17,600 on Saturday, below 2017’s all-time high of $19,500.
Other data from Arcane outlined the profitability of specific mining machines in recent months. The Antminer S19 now yields 80% less than it did in November 2021, at a cash flow of $13,000 per Bitcoin. Meanwhile, Antminer S9s are now cash-flow negative.
It doesn’t help that the hash rate has ironically risen to all-time highs in recent weeks. A higher total hash rate reflects a more competitive mining environment, reducing profits for individual miners.
The Renewable Remainder
Circumstances like these often only leave room for the most efficient miners to stay online. Thankfully, these are typically miners that use renewable energy sources, as they come with near-zero marginal cost. For instance, Norway hosts about 1% of the Bitcoin hash rate – an outsized proportion due to its heavy reliance on virtually free hydroelectric power.
The push to make mining renewable is strong within the political realm. Commodities and Futures Trading Commission (CFTC) chairman Rostin Benham wants to create incentives for the industry to go totally renewable. If not, he’d like to see Bitcoin abandon mining entirely.