- The sustainability of miners’ profits and losses fell to a low not seen since June 2021.
- The decline in profitability further reduced miners’ selling pressure.
Bitcoin [BTC] Miners’ earnings have taken a big hit since the halving earlier this month, causing pain for the sector that is crucial to the smooth functioning of the world’s largest digital asset.
Miners face losses
In an April 29 X-post, Julio Moreno, head of research at on-chain analytics company CryptoQuant, revealed that miner profit/loss sustainability has sunk to a low not seen since June 2021.
Source: CryptoQuant
For the curious, the aforementioned metric measures the growth of block rewards – a crucial revenue stream for miners – against the growth of mining problems, which is an indicator of their costs. The sharp drop indicated that miners were “extremely underpaid” at the time of writing.
Moreover, compared to the price of Bitcoin, daily miner revenues were significantly low, additional data showed.
The recent halving has reduced block rewards from 6.25 BTC to 3.125 BTC per block, leading to a situation where miners would have to double their mining investments to break even.
While big miners with deep pockets might find it easier to weather the storm, the small miners would eventually bow out.
Selling pressure decreases
Due to the decline in profitability, most miners have resisted the urge to sell their Bitcoins and generate cash. According to AMBCrypto’s analysis of CryptoQuant data, selling pressure from miners has fallen further since the halving.
Source: CryptoQuant
The reduced selling pressure was also reflected in the lower number of coins transferred to exchanges. Since the halving, the seven-day moving average has been miner to exchange flows 70% fueled.
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Costs do not come to the rescue
Miners were also hit by a sharp drop in transaction fees since the halving day.
The percentage of fees in total block rewards gradually decreased from 75% on April 20 to 9% on April 29.
Source: CryptoQuant