- Miners’ revenue from transaction fees has increased over the past week.
- Miners are liquidating their BTC stocks to cover their operational costs.
Bitcoin [BTC] Miners have shunned the hoarding mentality and have liquidated a significant portion of their holdings in recent days. According to an analysis company in the chain InTheBlokSince the start of the week, miner reserves have fallen by more than 20,000, marking the most intense selloff since April.
Source: IntoTheBlock
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Significance of Miners Sellout
Selloffs are typically seen as bearish events because they flood the market with more coins. However, liquidations of miners occur regularly and should not be seen as an anomaly.
Miners are responsible for bringing new BTC coins into circulation. This comes in the form of fixed rewards, currently 6.25 BTC, for each block they validate and add to the Bitcoin network.
Although BTC miners are rewarded for their efforts, cash is needed to cover their often high mining expenses, such as machinery, power and rent. That’s why they often dump their Bitcoins.
Normally, miners wait for a meaningful increase in the price of BTC before selling it. However, in the current scenario, this was not the case. The king coin fell more than 2% from the beginning of the week to the time of writing, data from CoinMarketCap shows.
Source: CoinMarketCap
Miners benefiting from last week’s profits?
Upon closer inspection, the share of miners’ total revenue from transaction fees showed a notable spike last week. Interestingly, this was also when BTC surged past $28,000 for the first time in six weeks.
These developments could have sufficiently filled the coffers of miners. Fearing further price drops that would have affected their earnings, these players therefore quickly unloaded their bags.
Source: Glassnode
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While miner revenues have clearly increased in recent days, it was important to put this in a broader perspective. Since the unprecedented jump in the first week of May, transaction fees collected by miners have entered a downward spiral.
The bearish nature of the market limited the full use of the blockchain, which happened in the past. As a result, transactions dropped dramatically and with it the money miners earned by validating transactions.