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Bitcoin: The woes of BTC miners continue as prices crash

Miners recorded a fall in fee revenue even as Bitcoin recorded its steepest drop of 2023 in the last week.

Written by Written by Aniket Verma
Reviewed by Reviewed by Aniket Verma
Updated August 20, 2023
  • As BTC’s price crashed, it caused a big dent in miners’ total earnings.
  • Miner reserve increased substantially indicating a hoarding mentality.

Bitcoin [BTC] miners’ predicament was set to continue as revenue earned through creating new blocks on the chain sank to new depths.

Read Bitcoin’s [BTC] Price Prediction 2023-24

As per an update shared by on-chain analytics firm Glassnode dated 19 August, the total transaction fees paid to miners fell to a new 5-month low of $21,256. This drop was worse than the previous 5-month low, recorded more than a month ago.

Miners’ woes continue

The fall in fee revenue came even as Bitcoin recorded its steepest drop of 2023 over the last week. After wiggling in a tight trading range for more than a month. the king coin broke steeply to the downside with weekly losses of 11% at press time, data from CoinMarketCap revealed.

It is a known fact that miners rely on fiat currency to finance their ever-increasing hardware and other infrastructure costs. Hence, they convert their BTC holdings into cash frequently.

However, as prices crashed, it caused a big dent in miners’ total earnings, as reflected in the graph below.

Source: Glassnode

Notice how the drop in revenue came abruptly following a sustained period of increase. This possibly threw their liquidation plans into disarray.

As per CryptoQuant, the amount of BTC held by miners increased substantially over the past week, forming a negative correlation with the price. As a result, miners developed a hoarding mindset and waited for prices to rebound slightly before dumping their stashes.

Source: CryptoQuant

Hash rate continues to rise in the long-term

Despite the ebbs and flows of the mining sector, it was pertinent to note that the overall hash rate for Bitcoin has only trended upwards over the years. A higher hash rate is imperative for the overall security and decentralization of the blockchain. It helps in preventing malicious players from launching assaults like the 51% attack.

Is your portfolio green? Check out the Bitcoin Profit Calculator

However, a rising hash rate demands installation of sophisticated and expensive mining equipment. With the decline in revenue as highlighted earlier, less-efficient miners might be eventually forced to shut down their rigs.

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.

Aniket Verma

Aniket Verma works as a journalist at AMBCrypto. Contrary to most who are primarily interested in merely tracking price movements of cryptos, his focus is on examining the niche intersection between cryptocurrencies and traditional finance. A so-so Bitcoin maximalist, Aniket has a strong disdain for memecoins and the unfounded frenzy they seem to generate every market season. Coming from a strong engineering background, Aniket previously worked as a Content Manager for TV9 Network. Before his stint over there, he was an Associate Multimedia News Producer at Reuters.

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