Analysis of the state of bitcoin mining; How much does the sale of miners affect the price?

The decline in the price of bitcoin in recent months has led some diggers of this digital currency to sell the extracted units to cover the cost of their mining farm. According to the latest statistics, the balance of bitcoin miners has just reached its lowest level since 2011; But to what extent will this massive sale affect the price of bitcoin and the future of the market?

According to CryptoSlate, even given the usual fluctuations in the price of digital currencies, it must be said that this market has recently gone through many volatile months. This year began with rising inflation and was followed shortly after by the Russia-Ukraine war; The problem that pushed the price of bitcoin from the highest $ 50,000 at the end of 2021 to lower levels. These successive events have also had a negative impact on the bitcoin mining industry.

The bitcoin mining industry has grown exponentially and increased competition in this area. This has led to hash levels not seen before. However, these low prices have affected the profitability of bitcoin mining, and as a result, bitcoin miners’ reserves have declined and some are likely to sell to cover their daily expenses. In addition, the effects of the ban on digital currencies in China can be seen by analyzing the current distribution of alert levels between countries.

The hashrate is actually the processing power that miners spend on maintaining the security of the structure based on proving the work of the bitcoin blockchain. This processing power is used to solve cryptographic algorithms (which are in the SHA-256 bitcoin network), process transactions and reach consensus in blockchain-based workflows. Analysts use the hashrate as an indicator to measure network security; Because the higher the hashrate, the harder it is for an attacker to gain control of 51% of network resources.

Analysis of the state of bitcoin mining;  Do miners want to sell their assets?
Bitcoin hash chart.

As can be seen in the image above, the hash rate of bitcoin has increased in the last few years and now reaches new peaks of 200 million per second (TH / s). This is partly due to the growing popularity of the digital currency industry and the institutions that want to participate in this emerging market. As the hash rate increases, so does competition for bitcoin mining and the profitability of the mining industry for current miners decreases.

The graph below shows the inventory of addresses associated with bitcoin mining pools. Bitcoin miners appear to be selling and reducing their inventory from addresses from the beginning of 2022. Currently, the inventory of bitcoin miners is at its lowest level since 2011 – 1.95 million units.

Analysis of the state of bitcoin mining;  Do miners want to sell their assets?
Bitcoin miners stock chart.

As can be clearly seen in the image above, the miners’ bitcoin stocks have shrunk significantly, which is probably directly related to the sharp increase in hashtags. Raising awareness means a more competitive environment that reduces miners’ profits. Similarly, declining bitcoin prices are putting more pressure on miners’ reserves.

Given these problems, it can be argued that miners are likely to reduce their inventory of bitcoins in order to cover their short-term operating costs.

Miners who used to hold their bitcoins for years can still influence the price. However, recent data show that the impact of the sale of maneuvers on the price of bitcoin has decreased. The share of miners in the volume of intra-network trading is also constantly declining and now about 0.97% of all bitcoin blockchain transactions are related to miners’ portfolios; That is, miners have recently moved fewer bitcoins into the network.

In addition to declining miners’ stocks, the industry has undergone major changes since China banned bitcoin mining last summer.

Extraction pools combine the computing power of different miners to increase their chances of winning prizes for network blocks and increase their predictable revenue.

Analysis of the state of bitcoin mining;  Do miners want to sell their assets?
Graph of the hashrate distribution between the different pools.

The diagram above shows the hash rate distribution of retrieval pools over time. Despite the fact that 9 months have passed since the ban on the extraction of digital currencies in China, its effects are still obvious. Previously, the important bitcoin digging pools Bainance and Huobi have completely disappeared, and both now represent zero percent of the total hash rate distribution of the bitcoin network. The collapse of China-related mining lakes has paved the way for the growth of new basins. Among them, Foundry USA Pool was the most active bitcoin pool in the last 90 days, extracting 2267 blocks.

In the past, China’s Inner Mongolia region has been a major source of digital assets. Immediately after the austerity measures in the country, companies active in this field fled China and migrated to other countries; The state of Texas was one of the main beneficiaries of this immigration.

Then cities like Denton, Texas, which suffered heavy losses after the devastating winter storm, felt the positive impact of the migration of miners. The main research institute, whose shares are publicly traded on the stock exchange, recently signed a contract to use the power at the Denton Natural Gas Power Plant to extract bitcoins, in return for which it will help Denton pay off the city’s loan. Ex.

Finally, despite the significant decline in miners’ reserves over the years, it must be said that their pressure to sell is not high enough to have a negative impact on the price of bitcoin. The most likely reason for the decline in bitcoin miners’ reserves is their need to cover operating costs, and lowering the price, along with increasing hash rates, has made things a little harder for them. In addition, nine months after the ban on digging for digital currency in China, the effects are still being felt throughout the industry.

For the first time in 90 days, the US money pool has discovered the largest share of digging in the bitcoin network. Finally, the United States appears to be pursuing a new policy that will make it a leader in the bitcoin industry.

Analysis of the state of digging after bitcoin; How much does the sale of miners affect the price? appeared first for currency.

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