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19 July 2022 18:09
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In just one day, the miners sold about 14 thousand bitcoins, converting them into real money. Private crypto investors are leaving the market and selling tokens to cover their mining costs, which suddenly began to bring only losses. What is happening is beneficial only to large companies mining tokens – the departure of small competitors, taking into account the peculiarities of the blockchain, reduces their mining costs and increases the productivity of their farms.
New turmoil for the crypto market
In July 2022, miners from around the world got rid of more than $300 million worth of bitcoins in just a day, writes CNBC with reference to the analytical company CryptoQuant. At the exchange rate at the time of the token reset, this is about 14 thousand bitcoins.
It is not yet known whether this is a world record, however, CryptoQuant experts record not the most rosy statistics for the crypto market. According to them, over the past few weeks, investors have sold the largest number of bitcoins since January 2021. In other words, in a year and a half, faith in the main cryptocurrency the world has been greatly weakened.
In the CryptoQuant report, such a sharp sale of tokens is called “miner capitulation” (miner capitulation). This kind of bitcoin sell-off usually indicates that miners are preparing to sell their previously mined coins to cover ongoing mining costs.
Who is guilty
At the time of publication of the material, the bitcoin exchange rate was within $22.2 thousand (data from the CoinDesk profile resource). This is a far cry from the record highs of November 2021, when token was valued at nearly $70,000.
All subsequent months, bitcoin showed a depreciation, including against the backdrop of negative changes in geopolitics, despite the exhortations of cryptocurrency evangelists that what is happening in the real world does not affect virtual money in any way.
It got to the point that income from mining ceased to exceed the costs associated with this type of activity. How informed CNews, many Russian crypto miners failed to recoup the cost graphics cards for their farms and started selling them on bulletin boards at discounted prices. Someone was even less lucky – their earnings from mining were no longer enough even to pay for electricity.
This happens not only in Russiabut also in many other countries of the world, especially those where prices have risen sharply recently electricity. “Given the rate of growth in the cost of electricity and the rapid depreciation of bitcoin for some miners, the cost of its production may be higher than its own price,” quotes CNBC analyst words Citi Joseph Ayub (Joseph Ayoub).
In other words, miners are getting rid of bitcoins, wanting to at least stop losing money on a business that has long ceased to be profitable and turned into a loss.
The big players are not leaving yet
Participation in the “surrender of miners” is taken not only by home crypto miners, but also by large organizations closely associated with virtual money. For example, Core Scientific got rid of almost all of its bitcoins in just a month.
Core Scientific is one of the largest American public companies whose main business is cryptocurrency mining. During June 2022, she sold about 7,200 bitcoins, earning an average of $23,000 for each.
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Core Scientific CEO Mike Levit (Mike Levitt) told CNBC that his company, like any other, needs to pay its bills, and in fiat currency, not virtual. “We mine and earn or produce bitcoins, but our costs, expenses and liabilities are in dollars,” Levit said, adding that bitcoin mining is still quite profitable for his company. The margin in the industry is currently around 50%. At its peak, it rose to 80%.
Despite what is happening on the market, Core Scientific is in no hurry to leave it. The company invested part of the proceeds from the sale of tokens in the development of its business, including the purchase of a new specialized hardware.
The stock of optimism is not yet exhausted
Mike Levitt is very optimistic about the future of the cryptocurrency market. In his opinion, in the future, bitcoin can rise in price to $35,000 and even up to $40,000. However, this is still far from peak performance.
“Surrender of miners”, during which many private companies left the market investors, in fact, is very beneficial for large players in this market. The departure of some miners provoked a decrease in the total hashrate blockchain– remember bitcoins.
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“As prices fall, the global hashrate or competition for bitcoin mining decreases as less efficient miners leave the network. miners” said Mike Levitt.
Hashrate is a term used to describe the processing power of all the miners on the bitcoin network and has dropped 15% in the last month. Ultimately, this is good for large mining companies that can afford to weather the downturn in the market.
As less efficient miners go offline and the global hash rate declines, the combined performance of computers and farms still involved in bitcoin mining increases “And thus the cost of electricity per bitcoin mined decreases,” Levitt concluded .