Bitcoin On-chain Data Shows Miners Offloading BTC as Revenues Shrink


Since the beginning of June, bitcoin miners have been selling their bitcoins, which could put additional pressure on the price of the cryptocurrency.

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Data from the Bitcoin network shows that miners are selling their holdings, according to the data. Reduced earnings from a slowdown in Ordinals activity as well as an all-time high in mining difficulty and hash rate could be contributing factors to the selling pressure.

According to on-chain analytics firm Glassnode, “Coins from miners have been arriving at exchanges in large quantities.”

According to Glassnode data, on June 3, Bitcoin mining activity surged to levels last seen in the early 2021 bull market, hitting a three-year high.

The one-hop supply metric of miners, which gauges the amount of Bitcoin held in addresses that receive coins from mining pools, has also decreased, according to data from Coin Metrics.

Since May 2023, the indicator has shown a consistent uptrend in miner holdings; however, in the second week of June, the trend in mining stock reversal was observed.

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One-hop supply of Bitcoin miners. Source: Coin Metrics

Increase in Mining Difficulty and Reduced Ordinals Activity

The measure of the difficulty of discovering a new block in the Bitcoin blockchain network, known as the “mining difficulty,” reached an all-time high at the beginning of June.

To guarantee that new blocks are added to the blockchain on average every 10 minutes, Bitcoin difficulty is periodically adjusted. Mining becomes more challenging when the network’s processing power is increased, and vice versa.

Based on the network’s overall computational capacity, or hash rate, the difficulty is modified every 2,016 blocks, or roughly every two weeks. On May 31, there was a change that resulted in a 3.39% increase in overall difficulty.

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Bitcoin mining difficulty. Source:

Miners’ profits are eaten away by the rise in Bitcoin difficulty, which may also cause their losses to rise.

The network’s hash rate reached a new all-time high of 381 exahashes per second on June 11 as a result of increased competition among miners since the last difficulty adjustment. The selling pressure will probably increase when the upcoming difficulty adjustment is due this week.

The decline in Bitcoin Ordinals activity that had been driving up miner earnings in May resulted in lower payouts to miners. A two-month low was reached in the total fees paid for Ordinal inscriptions on Bitcoin, and nonfungible token exchange trading volumes followed a similar pattern.

The seven-day average pay for miners fell from a high of $33.9 million in May to $25.8 million at the beginning of June, according to Glassnode data.

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The 7-day moving average of Bitcoin miner revenue (orange) and BTC’s price (black). Source: Glassnode

Summer officially began in June, and due to the high temperatures in the Northern Hemisphere and the rising cost of electricity, some mining farms experienced a significant load.

Texas miners had to temporarily halt operations in 2022 due to the summer heat waves. Approximately 15% of the nation’s mining capacity, according to reports, is located in Texas.

In 2023, the heat waves might get worse, which would reduce the network’s mining hash rate.

Identifying Miners’ Stress Levels

For the current mining equipment, the cost of producing one bitcoin ranges from $35,532 to $21,244. The decline in Bitcoin’s mining hash rate may be contained if its price remains above $25,000.

The industry could revert to capitulation mode, which is characterized by accelerated BTC selling and a decreased network hash rate, if the situation worsens over the course of the summer and the cost of mining increases without a corresponding increase in the price of BTC.

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Bitcoin price chart with production cost indicator. Source: TradingView

Additionally, even though Bitcoin’s hash rate has increased, its hash price metric, which measures the market value assigned per unit of hashing power, significantly decreased in May, pointing to a slowdown in the demand for mining equipment.

According to an update from Hashrate Index, the “hashprice [PH] is back below $70.00/PH/day for the first time since mid-March” after touching an average of $82.23 per PH per day in May, a 14.8% decrease.

It will be interesting to see how far the sell-off goes and whether or not Bitcoin Ordinals activity picks up in the interim.

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