Bitcoin miners are selling their mined tokens as the falling bitcoin price erodes profit margins while capital markets become more unfriendly.
Miner outflows on exchanges have reached their highest level since January, Compass Mining - a bitcoin mining service provider - wrote today in a research note using data from CoinMetrics. "Miners may be starting to sell bitcoin on the open market," Compass wrote. "At the very least, they are feeling the pain after the last big price drop. Combined with a downward difficulty adjustment - suggesting miners are pulling back - it seems miners are hitting a wall with their profitability."
Mining Bitcoin (BTC) has become less profitable as the cryptocurrency's price has trended lower. Popular machines like Bitmain's Antminer S9 are becoming money losers with electricity prices at six cents per kilowatt hour. Troubled miners who prefer not to shut down their machines may try to raise capital in the debt or equity markets and/or sell Bitcoin holdings.
Argo Blockchain (ARBK) plans to raise debt capital and sell some of its bitcoin to cover costs, the company said in an analyst call on its first-quarter results. Core Scientific (CORZ), the world's largest miner by hashrate, has already sold some of its mined bitcoin this year and plans to continue doing so. Riot Blockchain (RIOT), a former confirmed hodler, sold nearly half of its mined bitcoin in April after also selling a significant amount in March.
Cathedra Bitcoin said in a May 30 statement that it sold 235 bitcoin during the month to increase liquidity and "insulate" itself from further price declines. The company also had a difficult April, operating at only 45% of its expected hashrate due to storms that affected its North Dakota site.
And then there's Marathon Digital (MARA), which hinted during its earnings announcement in early May that it might sell some of its bitcoin.
The latest hint comes from Toronto-based Digihost, which announced today that it has sold some of its mined bitcoin to fund energy costs.