Bitcoin (
$99,739.00 ) ’s highly volatile price has devastated the majority of the crypto market and is now dragging miners down with it. While often considered the foundation of the Bitcoin ( $99,739.00 ) network and its most resilient players, miners are suffering from rapidly decreasing profit margins.
Bitcoin ( $99,739.00 ) mining difficulty currently stands at just 1% below its all-time high and is squeezing a large percentage of miners out of the network. Mining profitability is about to reach one of its lowest points, as mining revenue per terra hash dropped below $5,000 at the beginning of September.
Graph showing miner revenue per terra hash (Source: Glassnode)
Faced with increased mining difficulty and decreasing profitability, miners were forced to sell their Bitcoin ( $99,739.00 ) holdings en masse. Miners sold over 12,000 BTC since July when the total Bitcoin ( $99,739.00 ) supply held in miner addresses reached its peak of 1.84 million BTC.
Data from Glassnode has shown that a similar capitulation occurred in November 2021 when Bitcoin ( $99,739.00 ) reached its all-time high. At the time, miners sold around 30,000 BTC. If miners follow a similar pattern throughout the fall, we could see an even bigger sell-off in the coming weeks.
Graph showing the 30-day change of the Bitcoin ( $99,739.00 ) supply held in miner addresses (Source: Glassnode)
While hash ribbons show that the worst of the capitulation is over, shrinking miner balances paint a different picture.
Graph showing the Bitcoin ( $99,739.00 ) balance in miner wallets (Source: Glassnode)
However, the massive sell-off we’ve seen in the past two months might actually be good for Bitcoin ( $99,739.00 ) in the long run. While brutal, fluctuations in mining profitability purge the network from unprofitable operations and weak miners unable to bear the volatility. When the market stabilizes, the Bitcoin ( $99,739.00 ) network will be left standing on the shoulders of the most resilient and most profitable miners — strengthening it for future cycles and volatility.
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