Bitcoin miners are closer to being profitable again and selling less of their holdings, which could rally BTC.
Bitcoin (BTC) miners have recorded slight relief on their margins. This comes after a massive decline following the April halving, which cut revenues (block rewards) in half. According to CrypoQuant analyst Axel Adler, the average daily revenue for BTC miners eased above $30 million in July from its peak of $74 million in May.
Photo: CryptoQuant
For perspective, miners are now getting 3.125 BTC as block rewards compared to 6.25 BTC before the April halving, exclusive of transaction fees.
Despite the remarkable improvement in average revenue for BTC miners, as seen by a slight bounce above $30 million daily, most miners weren’t making a profit as of press time.
BTC Miners Could Be Profitable Soon
In fact, profits have been an issue after the slush in block rewards in the April halving event. Since April, the average mining costs have been higher than the BTC price, as shown by data from MacroMicro.
Photo: MacroMicro
Interestingly, the gap between mining costs and BTC prices decreased in May but later widened in June. In July, the gap was reduced considerably, suggesting that BTC miners could be near profitability again.
On 29 July, the average mining cost was $73.6K, compared to the BTC price tag of $68.2K. That’s an average loss of over $5000 to mine a single BTC on that day. The mining costs include mining rig operations and energy consumption, amongst others.
Struggling miners could be forced to sell their previous BTC holdings to offset the operational costs. If more miners dump BTC to cover their expenses, it could put downward pressure on BTC prices.
Miner-to-Exchange Flow tracks sell pressure from BTC miners. An increase or spike in the metric means more BTC from miners has been moved to centralized exchanges for sell-offs, which could likely drag the BTC price.
Photo: CryptoQuant
On the contrary, a drop in the metric would suggest miners are withdrawing their BTC from exchanges. It denotes a bullish signal to BTC due to reduced sell pressure from miners.
The same scenario has played out, as illustrated by the attached CryptoQuant chart. Miner to Exchange Flow dropped sluggishly between 1 and 20 July, corresponding to a relief rally that saw BTC reclaim $60K and surge above $66K.
An uptick in the metric between July 20 and 24 saw BTC retrace shortly because miners dumped more BTC in exchanges. However, Miner to Exchange Flow has declined steeply since last Friday, reinforcing a bullish sign for BTC as it tapped $69K. Based on current market prices, miners currently hold a 1.81 million BTC reserve worth over $124 billion. This supply can immensely impact BTC prices.
However, recent data suggests that miners are close to being profitable again and aren’t selling off their BTC. This could offer much-needed relief for BTC to climb higher.
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