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Bitcoin Miners Sold 100% of Their Outputs in May: Analyst

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The latest study by digital asset firm Arcane on bitcoin miners shows that public companies sold 100% of their mined coins in May due to declining profit margins and volatile market conditions. The sales rate jumped sharply from around 30% in the first four months of 2022.

HODL strategy

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During a bull market, public bitcoin miners tended to keep most of their mined coins when the situation was in an upbeat state. However, when the dark times came in May when the main cryptocurrency fell below $30,000, many miners were forced to abandon their HODL strategy by selling their coins. research work from Arcane.

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One of the key reasons is the “dramatic drop in profitability” amid rising hashrate and pessimistic market conditions. Study indicated The extremely high profitability recorded in November last year led to massive investment in miner production capacity, resulting in “rising hashrate as bitcoin price falls.”

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This phenomenon lowered the profit margin as miners had to use more processing power to get the equivalent performance, as was the case in the past. Despite the benefits of access to cheap electricity and energy efficient machines, some miners still struggled to create a net cash flow for their mining business as the bitcoin dive did not provide an obvious respite:

“The rise in hash rates and the fall in the price of bitcoin have reduced the profitability of mining to levels not seen since 2020. Priced at $40 per MWh, the energy efficient Antminer S19 is currently generating $13k cash flow per bitcoin, equating to an 80% reduction. from the November 2021 peak. Antminer S9, our old generation machine proxy, now has a negative cash flow.”

Sell ​​bitcoin to pay off debt

It is worth noting that many publicly traded miners can easily raise capital when the broader stock market remains bullish. Miners typically mortgage their machines and bitcoin holdings for loans, which were used to cover operating expenses and expand mining capacity. Thus, they were able to keep most of their bitcoins as they believed that the situation would remain in such an optimistic state.


For example, Marathon, the largest bitcoin holder among all the listed miners with 9,673 BTC in balance, had a total debt of $729 million until March 31st. The giant used most of the loans to buy machines, betting that the main cryptocurrency could continue to rise in value.

Given the sharp drop in the price of the asset, which led to a decrease in the cost of mining machines, many miners had to sell their monthly production in order to pay off their debts and cover operating expenses. Companies that run out of dry powders may even face financial difficulties. Study is reading:

Miners have several options for financing their operations without selling bitcoin, such as issuing shares or raising debt with their machines or bitcoin assets as collateral. It was easy during the raging mining bull market of 2021 when capital was circulating. Market conditions are now completely changing and as a result we are likely to see more mining companies moving away from their hold-at-all-cost strategies.

Canadian mining giant Bitfarms has announced it is adjusting its HODL strategy and selling 3,000 BTC — nearly half of all its Bitcoin holdings — for about $63 million to improve its corporate liquidity. This was the latest example of miners deleveraging and reducing their debt amid rising market volatility.

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