Bitcoin (BTC) miners could be the next price “trigger” for the largest cryptocurrency, research warns as withdrawals intensify.
In a Quicktake post for on-chain analytics platform CryptoQuant on Nov. 10, contributor MAC.D suggested that miners could face “bankruptcy” soon.
Research: Network conditions will “strangle” miners
After the BTC/USD pair plunged 20% in a matter of days, miners began operating at a cost higher than the block subsidy and transaction fees they earned.
The result is that mining rigs are idle and miners sell BTC to break even.
“BTC security is at an all time high, but its mining volume is gradually declining. This will throttle miners,” MAC.D explained.
He noted that outflows from miners’ wallets exceeded 5,400 BTC on November 9 alone, something that “can be interpreted as increased selling pressure.”
In the future, the situation could worsen if major mining companies end up selling off stored BTC en masse as a way to pay off their obligations.
“There is already a lot of news that NASDAQ-listed mining companies are unable to pay their debts. If they go bankrupt, a situation will arise where they will have no choice but to sell BTC,” the post continues:
“Therefore, it is necessary to keep a close eye on the miners’ withdrawal table, and if the amount of miners’ withdrawal increases, BTC is likely to fall further.”
However, there could be a silver lining shortly after such an important capitulation. Historically, there has been a correlation between miner demise and BTC price lows.
“But the bankruptcy of past miners has formed the bottom of BTC,” the post concludes:
“So when they go bust, they have to take advantage of it to buy BTC.”
Mining costs outweigh profits
Continuing the theme, journalist Colin Wu, for his part, pointed out that even the most popular Bitcoin miners were now unprofitable.
“As BTC has fallen by 20% in the last 7 days, F2POOL shows that bitcoin miners like Whatsminer M30S and Antminer S17Pro have fallen below the disconnect price”, tweeted that day, linking to the main mining pool f2pool:
“The best bitcoin miners, like the Ant S19 XP, also account for 56% of the electric bill.”
Charles Edwards, CEO of asset manager Capriole, also pointed to the unsustainable cost of production versus miner revenue at current prices.
“Many Bitcoin miners are turning off their equipment”, commented on a graph.
“The electrical cost of Bitcoin has just been exceeded for the second time in 5 years. The average miner’s electrical bill is now greater than the income earned.”
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