Bitcoin miners left with no option but to HODL as prices stagnate
- The total supply held in miner addresses ripped to a monthly high of 1.82 million.
- Miner revenue has went downhill since the BRC-20 frenzy in early May.
The ongoing lull in Bitcoin’s [BTC] price seemed to have affected miners’ economics as well, deterring them from cashing out their holdings. As per a recent update shared by on-chain analytics firm Glassnode, the total supply held in miner addresses ripped to a monthly high of 1.82 million.
Previous 1-month high of 1,829,248.286 was observed on 02 August 2023
— glassnode alerts (@glassnodealerts) August 6, 2023
Read Bitcoin’s [BTC] Price Prediction 2023-24
BTC testing miners’ patience
As is well known, miners are responsible for creating new BTC tokens and bringing them into circulation. Miners depend on fiat currencies to meet their machine and electricity expenses and hence frequently liquidate their holdings.
However, Bitcoin has remained rangebound over the last month and a half. Since the market rally in June, the king coin has wiggled in a small range of $29,000-$31,000, according to CoinMarketCap. In fact, the bulls have struggled to break through the $30,000 barrier in the last two weeks.
The underwhelming performance may have strengthened the hoarding mentality, and miners might look to offload a greater portion of their stashes during the next bull run.
Miner earnings dry up
Bitcoin miners have been having it rough for the past few months. The total revenue – a combination of block subsidies and transaction fees, has went downhill since the BRC-20 frenzy in early May.
BTC’s weak price action drove away users from the blockchain, causing a significant decline in network traffic and in turn, fees generated from transactions. Having been battered by the punitive crypto winter of 2022, these developments added to miners’ miseries.
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Not an encouraging signal
Moreover, the above chart revealed a significant drop in the 7-day average of the hash rate over the last month. The fall in profitability could have possibly led to the exodus of less efficient miners.
Overall, the decline in miner revenue and hash rate were alarming developments for the Bitcoin network. Not only do they disincentivize mining, but the subsequent exodus of miners could compromise the blockchain security.
At the time of writing, BTC exchanged hands at $29,032.91, recording marginal gains in the 24-hour period.