The broader crypto market has been in a state of downward price swing, with Bitcoin falling almost daily. Before now, Bitcoin miners have stashed away some BTC tokens waiting for their sunny days to come. However, the continued fall in virtual asset prices has set a steady downward trend for the most important crypto token.
Therefore, miners are selling their holdings to flatten the rising costs of operations and other activities as Bitcoin makes some recovery steps.
There is reportedly an increase in the transfer of BTC tokens from miners to exchanges. The record shows a progressive increase since January, with the highest value for May at 195,663 BTC. With the average BTC price of $32K in May, the total value is $6.3 billion for the tokens sold.
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The high value could not just be a liquidation of the miners. Some of them could move their holding for other transactions on the exchanges. Additionally, some prominent firms may have transferred large amounts of BTC tokens for sale through exchanges.
Since the price of Bitcoin has fallen by 35% this year, different categories of sellers are emerging in the market. Some small-scale miners faced huge liquidation challenges.
Riot Blockchain Inc. is part of the vendors. Publicly traded miners participated in the storage of BTC through price bets for the appreciation of the token. Additionally, equity investors have been using the company as a proxy to receive cryptocurrency exposure that reduces outright ownership of assets.
Reasons for increased Bitcoin liquidation by miners
With the trend of events within the bear market, conserving cash for large-scale miners is becoming more complex. This is due to the inability to raise funds through the sale of stock or debt. Therefore, they are looking for more profit through possible expansions.
One example is Riot’s recent ongoing mining facility they are building in Texas with a 1 gigawatt capacity. This new move was the start of a project after they finished their 750-megawatt mining farm, which is still one of the largest in the US.
Reacting to the situation, Will Foxley, Chief Content Officer at Compass Mining, offers his take on BTC sales. He said that the miners could be focusing on a larger crypto environment. Therefore, they see it as a good opportunity to sell their BTC holdings to keep their trades safe.
The entire saga is based on the challenges faced by miners during the fall of low prices in the market. Some miners have been ordering machines in the BTC uptrend for months. So even with the price drop, they are still expected to complete the payment.
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Matthew Schultz, CEO of CleanSpark, reports that some miners will have no choice but to liquidate their holdings to weather the storm.
Featured image from Pexels, charts from TradingView.com