Glassnode Reports Bitcoin Miners Dump BTC as Profit Shrinks
Summary: The on-chain data of Bitcoin shows that miners are selling their coins due to reduced profits from a slowdown in Ordinals activity, as well as mining difficulty and hash rate hitting all-time highs. Mining activity on exchanges reached a three-year high on June 3.
The on-chain data of Bitcoin shows that miners are selling their coins. Reduced profits from a slowdown in Ordinals activity, as well as mining difficulty and hash rate hitting all-time highs, may be contributing causes to the selling pressure.
Glassnode, an on-chain monitoring platform, reports that “Miners have been sending a significant amount of coins to exchanges.” According to statistics collected by Glassnode, Bitcoin mining activity on exchanges reached a three-year high on June 3. This level was last observed in the early 2021 bull market.
Mining Difficulty at Record High
Moreover, according to Coin Metrics, the number of Bitcoin held by addresses that receive bitcoin from mining pools has decreased over time. Since May 2023, the indicator has shown a steady increase in miners’ holdings. However, in the second week of June, miners reversed their accumulation trend.
The mining difficulty of Bitcoin, a metric of how hard it is to locate a new block in the Bitcoin blockchain network, hit a record high at the beginning of June.
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Blocks are uploaded to the Bitcoin blockchain on average every 10 minutes. Thanks to the difficulty algorithm that regularly changes itself. Mining becomes more difficult as the network’s computational capacity grows, and vice versa.
Adjustments to the difficulty are made every 2,016 blocks, or about every two weeks. And are proportional to the aggregate hash rate of the network. As Bitcoin mining becomes more difficult, miners’ profits decline and their losses may even mount.
Hash Rate Follows
The hash rate of the network reached a record high of 381 exahashes per second on June 11, reflecting increasing competitiveness among miners after the latest difficulty adjustment. This week’s upcoming difficulty adjustment is expected to increase the urge to sell.
Income for Bitcoin miners increased in April due to increased activity with Bitcoin Ordinals, however this trend reversed in May. Trading volumes on exchanges for non-fungible tokens have decreased, mirroring a decrease in the total fees paid for Ordinal inscriptions on Bitcoin during the last two months.