Key Points
- Bitcoin miners’ earnings have significantly dropped following the recent halving event.
- The reduced profitability has led to decreased selling pressure from miners.
Bitcoin [BTC] miners have experienced a significant decrease in earnings following the recent halving event. This has caused a considerable impact on the industry, which is critical for the operation of the world’s leading digital asset.
Julio Moreno, the Head of Research at on-chain analytics firm CryptoQuant, revealed in a post on 29th April that miner profit/loss sustainability has reached its lowest level since June 2021. This metric measures the growth of block rewards, a key revenue source for miners, against the increase in mining difficulty, which indicates their costs.
The Impact of Halving on Miners
The recent halving event reduced the block rewards from 6.25 BTC to 3.125 BTC per block. This has led to a situation where miners would need to double their mining investments just to break even.
While larger miners with substantial resources might be able to withstand this downturn, smaller miners might eventually have to exit the industry. Due to the drop in profitability, many miners have refrained from selling their Bitcoins to generate cash.
According to an analysis of CryptoQuant data by AMBCrypto, the selling pressure from miners has further decreased since the halving. This reduced sell pressure is also reflected in the lower number of coins transferred to exchanges. Since the halving, the 7-day moving average of miner-to-exchange flows has dropped by 70%.
Effects on Transaction Fees
Miners have also been affected by a significant decrease in transaction fees since the halving day frenzy. The percentage of fees in total block rewards has dropped progressively from 75% on 20th April to 9% on 29th April.
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