Bitcoin miners are selling their holdings while being caught between falling prices and rising difficulty
Bitcoinminers are selling off their tokens in order to continue mining for the world’s oldest cryptocurrency
- The cost of mining for Bitcoin is increasing with more people jumping on the bandwagon.
- With the price of Bitcoin falling, the profit margins are shrinking.
AdvertisementBitcoin miners are caught in a conundrum between funding their efforts to mine and holding onto the coins in their accounts. And, the number of miners selling off their stockpiles is growing.
According to blockchain analytics firm Glassnode, miners are now officially net sellers after being net holders for months.
What is Bitcoin mining?
For those who don’t already know, Bitcoin mining is the process of finding new blocks, verifying transactions and then adding them to the network. Miners get paid in Bitcoin for successfully participating in this entire process. However, with rising competition, mining has turned into a game of ‘fastest finger first’.
What could be done using a simple laptop back in the day, now requires stacks-on-stacks of specialised equipment and the insane energy requirements that come with it, in order to be the first to find a block.
More computing power means better odds of scoring a fresh block. It also means rising expenses for the upkeep for equipment, staying online and paying the bills.
So, what’s the problem exactly?
Simply put, on the one hand, it’s getting more expensive to mine for Bitcoin. On the other hand, it’s no longer as profitable to do so with the cryptocurrency’s falling prices.
And, in the interim — with costs overtaking profits — miners are selling their holdings to make up for the difference.
Mining for Bitcoin has gotten crazy competitive over the past one year with the price of the world’s oldest cryptocurrency hitting an all-time-high and just general adoption of digital assets as investors looked for a way to hedge against inflation.
However, the party seems to have come to a halt after Bitcoin’s price remained under pressure this year.
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