- Mining-to-exchange flows have increased dramatically in recent days.
- The higher revenues prompted miners to liquidate their inventories.
Bitcoin [BTC] Miners recently sent a large portion of their inventory to crypto exchanges, causing unrest among market participants.
According to AMBCrypto’s analysis of CryptoQuant data, the seven-day moving average of miner-to-exchange flows rose to the highest value in five months on January 1.
Source: CryptoQuant
Are miners keeping their profits?
Miners, as we all know, regularly liquidate their assets to cover the costs incurred in setting up mining infrastructure. However, such events ultimately put significant downward pressure on Bitcoin’s price. This is because miners are one of the largest owners of the asset.
A CryptoQuant analyst drew attention to previous such cases. A sharp increase in miners’ deposits on exchanges in May 2023 caused a significant price drop.
In fact, a similar decline in the value of BTC was observed following the recent transfer of coins from miners to exchanges.
“We need to monitor whether this increase in miners’ deposits is temporary or sustainable so we can invest wisely,” noted the analyst who goes by the pseudonym SignalQuant.
The jump in the sell-off follows a profitable last month for miners in 2023, which saw transaction fees skyrocket.
Miners made more than $23.7 million in transaction fees on December 16, when Ordinals’ frenzy boosted demand for blockspace.
Source: CryptoQuant
The surge in fee income pushed miners’ revenues to levels not seen since the peak of the 2021 bull market. After a prolonged and punishing bear market, miners couldn’t have hoped for anything better.
Such profits therefore justified miners liquidating their assets.
Source: CryptoQuant
Read BTC price forecast for 2023-2024
Miners see high returns on hashing power
Bitcoin started 2024 strong, bouncing above $45,000 with conviction, AMBCrypto found using CoinMarketCaps facts. The king coin was exchanging hands for $45,311 at the time of writing.
In addition to transaction fees, Bitcoin’s market value also affects miners’ profitability. The hash price rose to $102 per PetaHashes per day (PH/Day) on January 1, indicating a significant spike in revenue relative to the hash power deployed.
Source: Hash Rate Index