© Reuters
Investing.com – The market continues to see a lot of volatility and the market is struggling to hold above the $20,000 mark. The asset is facing a new threat triggered by the low level of prices.
The once thriving bitcoin mining industry, the backbone of the blockchain, has become its own worst enemy.
Multiple reports indicate that bitcoin miners are selling more bitcoins to cover the cost of their operations. The surge in sales is weighing on any potential bitcoin recovery as miner profitability continues to plummet below the cost of production.
A recent report by Arcane research revealed a significant spike in the amount of bitcoins leaving miners’ wallets. “In the first four months of 2022, state-owned mining companies sold 30% of their bitcoin production. Falling mining profitability forced these miners to increase their sell rate to over 100% of their production in May,” indicating that operational costs exceeded miners’ profits, forcing them to dip into their bitcoin savings to make up the difference.
Separately, leading bitcoin miner Bitfarms has become the latest in a long line of companies to boost sales amid the record cryptocurrency decline. Bitfarms said it sold 3,000 bitcoins for $62 million over the past week in a bid to boost its liquidity.
Along these lines, Coin Metrics estimates that miners have sold at least $500 million worth of bitcoin so far in June, reducing their inventory by almost a third.
This is because miners are shutting down their machines, as running them starts to cost more than they can recoup through mining rewards.