Bitcoin miners are under pressure as revenue continues to decline while production costs have been increasing.
Also, the crypto market remains bearish and long-term investors lose money. according to a newsletter by On-chain Analytics platform Glassnode.
Are Bitcoin miners Aggravating selling pressure?
Glassnode seeks to estimate the market’s value from a miner’s perspective by using a market metric called The Puell Multiple, a valuation tool that calculates the ratio of the daily issuance value of bitcoin (in USD) to the 365-day moving average of this value.
The Puell Multiple plummets to the sub-0.5 zone at a later stage of a long-running bear market, when capitulation is a possibility. Currently, this metric sits at 0.66, a crucial point that could lead to capitulation.
According to the analysis done by Glassnode, miner balances are reducing and miners are spending extra, the Miner Net Position Change currently indicates an aggregate miner balance reduction of between 5k and 8k BTC monthly.
This indicates a shift in miner behavior, as their balance had previously accumulated roughly 12k BTC during the first dip from ATH. BTC miners have however been adding to BTC selling pressure since Luna LFG sold over 80k BTC, analysis shows.
Bitcoin mining seems triggered by drop in revenue
Data shows that mining activities have increased significantly, and the cost of production has increased. Capital is being pumped into the industry, but mining revenue has decreased significantly. The market is currently trading between a weekly high of $31,900 and a low of $29,375. The first sign of a green market after nine weeks of red. The market’s uncertainty and stress have led to a reliance on Long-Term Holders.
Mining is now more expensive, rewards offered in USD continue to drop and may lead to a potential miner capitulation cycle ahead. There is reason to believe that the market is within the second and final capitulation phase of a Bitcoin bear market.
Despite the tremendous revenue stress, existing miners have expanded their operations and new miners have entered the network. Miners’ balance sheets may be put under additional strain as a result of money spent on mining hardware and facilities.
