May was a dark month for Bitcoin (BTC) mining profitability. In order to survive, the miners had to sell their BTC holdings, despite the pain that caused them. So says the mining analyst at Compass Mining, Mitch Klee.
in the most recent bulletin of the mining company, the specialist maintained that Bitcoin miners are selling their holdings “openly” to be able to cover operating costs “in the midst of a falling market.”
For his assertion, he cited a graph of the analytical company Coin Metrics, which shows that the 30-day average of the Flow of money from miners’ wallets to bitcoin exchanges grew by more than $400 million during the month of May. This is one of the highest averages so far this year.
This happened at a time when mining profitability fell to 2020 lows, as reported by CriptoNoticias.
To contrast, we place the graphic Provided by Coin Metrics and disseminated by Braiins Insights, which details the movement of money in and out of miners.
According to the date, on May 10, the total outflow of 106,860 bitcoins from the miners’ wallets was recorded. It was the second largest outflow movement reported this year. The same day just 35,685 BTC entered the operators’ wallets, according to information from Coin Metrics.
Although the trend remained downward for the rest of the month, hovered above 30,000 bitcoins, moving in and out of the miners’ possession, evidencing permanent movement in the finances of the operators.
Although it is not clear where the bitcoins go, the above graph could imply that many of the coins ended up in an exchange wallet.
“A month of capitulation”
For Mitch Klee, analyst, May was a month of “capitulation from many angles.” “From over-leveraged altcoin investors to Bitcoin miners,” he said, referring to the LUNA and Terra events, as well as the low profitability of mining.
According to the Compass Mining analyst, there were mining companies that had to sell their bitcoin holdings. He cited the example of Cathedra Bitcoin, which sold 235 BTC, or $8.8 million, at an average price of $29,152.
Riot Blockchain, one of the largest mining companies in the United States, also sold, according to Klee. In their case, they said goodbye to 450 BTC: of these, 200 BTC in March and 250 BTC in May.
“Miners could start selling their held bitcoins on the open market. At a minimum, they are feeling the pain after the last big drop in price.”
Mitch Klee, mining analyst at Compass Mining.
Less difficulty, miners go out
Klee warned that, added to the sales of the miners, there is the disconnection of equipment. This is suggested by the downward adjustment of the mining difficulty, which is currently at 29.9 trillion (T), “indicating that miners are shutting down.”
For him, it is nothing more than a sign that miners are being hit by the low profitability of their operationswhere there are cases in which the reward for solving a block is received at a loss.
Although with the latest bitcoin bounce, which was reported by CriptoNoticias, miners could be seeing new gains, as he explained. This is because the difficulty fell by 3.8% in its last adjustment.
With just over five days to go before the new difficulty adjustment and at a time when profitability seems to be beginning to recover, It remains to appreciate the experience of May, a month where profitability was the enemy.