JPMorgan: Miner dumping continues to put pressure on bitcoin price
Bitcoin miners are estimated to have sold over $500 million worth of bitcoin in June, according to CoinMetrics, with Bitfarms alone reportedly selling 3,000 bitcoins for $62 million.
According to data from Arcane Research, several bitcoin miners collectively sold about 100 percent of their production in May.
Miners sell more coins to cover their operating costs. According to CoinMetrics, miners are estimated to have sold over $500 million worth of bitcoin in June. Bitfarms is also said to have sold around 3,000 bitcoins for $62 million. According to JPMorgan, this is depressing the Bitcoin price and making a possible recovery more difficult. However, JPMorgan acknowledges that miners have no choice but to dig into their crypto holdings amid rising energy costs, the asset’s constant price decline, and increasing competition for profitability.
It has also been reported that since June 7th, an increasing number of coins have been sent to various exchanges by crypto miners. This was confirmed by researchers at MacroHive, who noted that “miners are increasingly liquidating their coins on exchanges.” According to data from Arcane Research, several bitcoin miners collectively sold about 100 percent of their production in May. This followed a 45 percent drop in Bitcoin price.
“In the first four months of 2022, public miners sold 30% of their Bitcoin production. The declining profitability of mining forced these miners to increase their sales quota to over 100% of their production in May.”
Cryptominers together have about 800,000 Bitcoin
They also mentioned that listed miners, who account for 20 percent of all miners , announced the sale of bitcoins in May and June to cover their operating costs, reduce leverage and increase liquidity. The same applies to private miners.
“The sale of bitcoins by miners to cover operating costs or for reallocation could continue in the third quarter if their profitability does not improve, which is likely to have weighed on prices already in May and June.”
The crypto price has been hurt this year by interest rate hikes to solve the inflation problem in the US and other major economies. Things got worse as the Terra ecosystem collapsed and nearly all major cryptocurrencies plummeted. JPMorgan acknowledges that price pressures may be eased by production costs falling to $15,000 this month. The reason for this is said to be to improve the energy efficiency of the mining hardware. Earlier this year, the price was hovering between $18,000 and $20,000.
According to CoinMetrics, crypto miners collectively own about 800,000 Bitcoin. This means that any attempt to sell their holdings in bulk could negatively affect the market.