Bitcoin miners have increased BTC selling amid the largest migration of mining hardware in history. Additionally, Bitcoin mining hash-power saw a sharp drop in the last few weeks.
According to the recent on-chain weekly analysis report published by Glassnode, two key factors are driving the recent jump in selling pressure from Bitcoin miners. Firstly, a dramatic decline in mining revenue. Secondly, a sharp increase in logistic expenses incurred by Bitcoin miners in relocation.
Glassnode mentioned that the mining market has seen a decline of approximately 65% in revenues compared to the levels in April 2021. The average mining revenue currently stands at around $20.73 million per day.
“Over this same period, Mining Difficulty has only increased by only 23.6%. The mismatch between revenue and difficulty is primarily a result of the global shortage in semi-conductors that has limited the ability of miners to expand their operations. In practice, this means that mining Bitcoin has been exceptionally profitable throughout 2021 and that some mining hardware that would otherwise be obsolete, remains profitable. This means fewer coins need to be sold to cover costs and miner treasury reserves can be built up,” Glassnode mentioned in the report.
Institutional Demand for Bitcoin
In the latest report, Glassnode highlighted a substantial decrease in institutional demand for Bitcoin. BTC-related investment products saw significant outflows in the last few weeks. During the first week of June 2021, Bitcoin investment products saw outflows worth $141 million, the highest weekly level on record. “A primary driver for Bitcoin price appreciation in 2020 and 2021 was both the narrative and the reality of institutional demand. One of the largest factors in this was the one-way flow of coins into Grayscale's GBTC trust fund as traders sought to arbitrage the high premium observed in 2020 and early 2021. Since Feb 2021, the GBTC product has reversed to trade at a persistent discount to NAV, hitting the deepest discount of -21.23% in mid-May,” the report added.
Grayscale is still one of the largest institutional holders of Bitcoin. The US-based asset manager has more than 650,000 BTC under management.
