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The most recent research from Kaiko Research indicates that forced selling by Bitcoin miners is likely to continue in the future despite the fact that incentives and network fees are decreasing. In the two months since the Bitcoin halving event, Bitcoin miners have started selling off their holdings to fund the costs associated with Bitcoin mining operations.
Bitcoin Network Fees Drop 90%, Miners Face Increased Pressure Amid Decreased Block Rewards
As stated in the Kaiko report, the Bitcoin network's fees have decreased by ninety percent in the past half-year. However, the Bitcoin network fee has not been reduced from its previous level of $45 in January 2024 to its current average of between $3 and $5.
Shortly after the Bitcoin halving event, network fees skyrocketed to $150 for a very brief period. This occurred amid a significant increase in the number of non-fungible tokens (NFTs) minted on the Bitcoin blockchain. This was a temporary reprieve for Bitcoin miners before the network fees began trending substantially more favorably.
The block rewards for Bitcoin miners have decreased from 6.25 BTC before the halving to 3.125 BTC after the halving. This has resulted in an increasing amount of pressure for Bitcoin miners. On the other side, a growth in the demand for computational power has increased the expenses associated with mining.
On the other hand, Bitcoin's price has been practically unchanged and has been exhibiting sideways consolidation, adding to the existing problems. Moreover, merchants or institutions are less optimistic, as evidenced by the considerable decrease in inflows into spot Bitcoin exchange-traded funds (ETFs) compared to the first quarter.
Because the price of Bitcoin is not receiving much stimulation from other sources, miners will be forced to sell more of their holdings because they have no other choice, Coingape claimed.
Marathon Digital Sells BTC Amid Profitability Concerns, Miners Explore Alternatives and Consolidation Trends
It was reported by Kaiko that Marathon Digital, one of the significant Bitcoin miners, had to sell 390 BTC during May. Additionally, the company intends to sell additional BTC to stabilize its operations. If extra miners decide to join the bandwagon, the price of Bitcoin might drop even further. For now, the immediate support for Bitcoin on the downside is sixty thousand dollars. If this is lost, the price of Bitcoin may decrease to $57,000 and then $54,000 in the future.
Additionally, players such as Marathon Digital have resorted to mining other proof-of-work cryptocurrencies, such as Kaspa (KAS), in response to the declining profitability of Bitcoin mining.
In addition, Kaiko forecasts that miners will consolidate to streamline their operations and increase their profitability as a result of their financial challenges. Given that the impacts of Bitcoin's halving are still impacting the sector, this trend of consolidation is anticipated to continue.
For example, Riot Blockchain made a hostile attempt to acquire Bitfarms Ltd., which illustrates the trend toward consolidation. Similarly, CleanSpark Inc. recently announced that it would be purchasing Griid Infrastructure Inc. for a total of $155 million in fully owned shares.
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