As bitcoin continues to grapple with the $70,000 level, signs of miner capitulation are beginning to surface. CryptoQuant data reveals that the flow of bitcoin leaving miners’ wallets for exchanges hit a two-month high recently, signaling a significant selling event. This trend was further emphasized by the largest daily volume of miner selling through over-the-counter desks since late March. The competition among miners for a reduced daily network reward of 450 bitcoins, down from 900 less than two months ago post-halving, has put pressure on mining economics. Analyst Mike Colonnese from H.C. Wainwright noted that while rising transaction fees have somewhat offset the impact, mining economics have effectively fallen by 45% compared to pre-halving levels. Consequently, miners are increasingly looking to cover their operating expenses and capital expenditures through the proceeds of bitcoin sales.
Data from CryptoQuant shows a surge in the hourly transfer of bitcoin from miners to exchanges, exceeding 3,000 bitcoins on June 9. Simultaneously, miners sold 1,200 bitcoins on OTC desks the following day, leading to a price dip with bitcoin dropping to around $66,000 on June 11. Despite repeated attempts, bitcoin has struggled to surpass the $70,000 level since reaching its all-time high of $73,797.68 on March 14. Julio Moreno, head of research at CryptoQuant, highlighted that the selling pressure stemmed from reduced revenues post-halving, with daily Bitcoin miner revenues plummeting by 55% to about $35 million compared to their peak in 2024.
One of the primary reasons behind the revenue decline for miners is the decreased transaction fees, with the Bitcoin network’s total daily transaction fees dropping by more than 44% pre-halving. Despite the record-high transactions on the network, the median transaction fee remains low. Moreno pointed out that the hash rate of the Bitcoin network has not significantly dropped since the halving, suggesting that miners are competing for a diminishing block rewards pool with retained computing power. Colonnese expressed optimism for large publicly traded miners following the halving, citing companies like CleanSpark and Iren (formerly Iris Energy) as top picks. These miners are estimated to be generating gross margins exceeding 50% with bitcoin at $70,000, and their all-in cash cost to produce a bitcoin averages around $45,000.
While CleanSpark has experienced a 19% decline for the quarter, Iren has soared by more than 140% in value. Year-to-date, CleanSpark has surged by 55% while Iren has seen an 82% increase. However, Colonnese cautioned that smaller bitcoin companies with less efficient operations, higher power costs, and limited access to capital might encounter significant challenges in the upcoming months. Without a substantial price rally for bitcoin in the short term, these companies could struggle to sustain themselves. The current market dynamics paint a nuanced picture reflecting the varying fortunes of bitcoin miners based on their operational efficiency and financial stability.