Miner Activity Peaks Ahead of Bitcoin Halving
As Bitcoin miners prepare for reduced halving revenues, their activity surged. According to Coinfactiva.com analysts, in mid-April, they executed 40,000 transactions daily. Most coins went to exchanges, negatively impacting prices.
Reserve Decline
Both newly mined and reserved coins were sold. Consequently, miners’ total reserves dropped to 1.82 million BTC, the lowest since January 2022.
Initial Halving Response
The initial halving response was positive. The simultaneous launch of the Runes protocol led to record network activity and fees. For the first block of the new era, miners earned 37.6 BTC in fees versus 3.2 BTC for finding the block. Average fees exceeded $120 that day, another record.
Brief Runes Protocol Popularity
However, the excitement around Runes faded quickly. Initially, Runes accounted for 80% of block capacity. Recently, they occupy only 3-4%.
Fee Decline
Network fees returned to minimal levels. As a result, terahash profitability hit a record low, falling below $0.05.
Miners Face Challenges
This is bad news for miners. Many struggle to stay afloat and have started shutting down equipment. Total network power dropped 16.4% since late May, reaching 581 EH/s.
Long-term Bitcoin Impact
In the long run, this will positively impact Bitcoin.
Industry Debt Issues
The industry’s problem is the significant debt load of publicly traded miners, who account for a third of the total power. They often overlook risks in pursuit of high metrics and investment appeal, leading to coin sales during crises. A notable example is the sell-off after Terra (LUNA) crashed in May 2022 and Core Scientific’s bankruptcy.
Balanced Market Pressure
CoinFactiva analysts conclude, that lower revenues will prevent miners from accumulating coins. Their market pressure will be more balanced and predictable, regardless of prevailing trends.