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Crypto miners have unloaded a significant portion of their Bitcoin reserves last week. In fact, miners transferred more than $300 million worth of BTCs from their wallets last week signaling that miner capitulation could be at hand.
Data from blockchain analytics firm CryptoQuant reveal that crypto miners transferred 14,000 BTCs out of their wallets in a single 24-hour period at the end of last week, CNBC reported. In the last few weeks, miners have already offloaded the largest amount of Bitcoin since January 2021.
The move suggests that crypto miners are preparing to sell their previously mined BTCs to cover operating expenses and other financial obligations, a phenomenon called “miner capitulation.” The current market downturn makes it hard for crypto miners to raise capital while they struggle to maintain profitability amidst the current decline in crypto prices.
“Given rising electricity costs, and bitcoin’s steep price decline, the cost of mining a bitcoin may be higher than its price for some miners,” Citi analyst Joseph Ayoub wrote in a note on July 5. “With high-profile reports of resignations from mining companies, as well as miners that have used their equipment as collateral to borrow money, the bitcoin mining industry could be under growing pressure.”
“Bitcoin miners are finally capitulating,” CryptoQuant contributor Edris said, Cointelegraph reported. “BTC price has been consolidating at the $20K level for the past few weeks, making investors wonder whether an accumulation or distribution phase is going on. Looking at the Miners’ Reserve chart, it seems like the latter is the case.
While some market watchers are concerned that miner capitulation might result to further selloff and drive BTC’s price downwards, CryptoQuant senior analyst Julio Moreno believes that could indicate that the bottom is near. He explained that capitulation even usually precedes the arrival of a market bottom based on past market cycles.
“With miners’ revenue dropping and mining difficulty still at high levels, miners are now in the ‘extremely underpaid’ territory,” Moreno wrote. “Some miners’ revenue can’t meet the break-even point, so they have to cash out to cover expenses/loans.”
