Bitcoin
Bitcoin miners face a wave of forced sales, says research firm
- Bitcoin’s April halving could force cryptocurrency miners to sell some tokens, Kaiko Research reported.
- The event left miners with fewer rewards, while operating costs remain high.
- These companies have not yet had to mine their bitcoin stocks thanks to high transaction fees, but that could change.
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Markets have long viewed bitcoin’s recent halving as a major price increase, but it could bring a wave of selling in one corner of the sector, according to Kaiko Search.
The April halving is a pre-coded event in which the amount of bitcoin rewarded to cryptocurrency miners is halved. Last month’s halving was the fourth in 12 years and reduced daily token production from 900 to 450, Bloomberg reported.
While this dramatic decrease in supply can increase the price of the token, it also adds considerable costs to the miner’s operations.
Mining companies only receive bitcoin when they successfully complete a blockchain transaction, which is a resource-intensive process — with less bitcoin received to cover costs, halving tends to be a sell-off event for miners, Kaiko wrote.
Until now, this has not happened, as companies have relied on high transaction fees to obtain funding – this is bitcoin given to miners for their service in confirming transactions. According to Bloomberg, rates rose amid an explosion of meme coin creation following the halving.
In one example, transaction fees accounted for 16% of the bitcoin received by Marathon Digital in April, compared to 4.5% in March, Kaiko said, adding that “the recent decline in fees could lead to selling pressure from miners.” .
Miners are often known for accumulating bitcoin treasures without selling, which analysts have previously pointed to as another supply constraint that drives up prices.
“For example, Marathon Digital holds 17,631 BTC worth just over $1.1 billion, while Riot Platforms holds another 8,872 BTC worth over $500 million,” Kaiko wrote. “If miners were forced to sell even a fraction of their holdings over the next month, it would have a negative impact on the markets.
Although Kaiko did not describe how this could impact the price of bitcoin, analyst Peter Brandt separately argued that bitcoin could fall to mid-$30,000 in the post-halving environment.