Bitcoin selling is likely to grow as token miners face pressure to offload their holdings due to a steep decline in revenue, according to data from cryptocurrency research and analytics firm Kaiko.
Bitcoin miners rely heavily on two sources of revenue: mining rewards and transaction fees.
But both companies have been posting more modest gains in recent weeks.
April’s halving event, which long ago saw mining rewards coded and reduced from 6.25 BTC to 3.125 BTC, created a unique headwind for miners looking to cover their overhead.
“The halving has typically been a selling event for Bitcoin miners because the process of generating new blocks incurs significant costs and miners must sell to cover the costs,” Kaiko researchers said in a new report. .
Meanwhile, miners’ other revenue stream – transaction fees they charge to process traders’ transactions more quickly – is also shrinking. In the first week of May, miners’ transaction fee revenue remained lower than Bitcoin mining revenue.
A potential Bitcoin sell-off could have a significant impact on the cryptocurrency market, especially during times of low market liquidity. Mining companies like Marathon Digital, which holds $1.1 billion worth of Bitcoin, could create dramatic market moves by selling just a portion of its holdings, according to Kaiko.
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About the author
Elizabeth Napolitano is a data reporter covering business and technology news with a focus on cryptocurrency. Before she joined The Block, Elizabeth reported on BigTech, AI, crypto, and video games for CBS Moneywatch. As a CoinDesk reporter, she covered DeFi, NFTs, and US courts. She received a master’s degree in journalism from CUNY. Follow her on X: @LizKNapolitano