Key Points
- Bitcoin miners have seen a slight recovery in revenue since the April halving.
- Despite this, many miners are still not making a profit.
After the April halving event, Bitcoin (BTC) miners have experienced a small improvement in their margins. This comes after a significant drop in revenues due to the halving, which reduced block rewards by half. According to CrypoQuant analyst Axel Adler, the average daily revenue for BTC miners rose to over $30 million in July from its peak of $74 million in May.
Impact of Halving on Miners
For context, miners are currently receiving 3.125 BTC as block rewards, compared to 6.25 BTC before the April halving. This is not including transaction fees. Despite the slight increase in average revenue for BTC miners, most were not making a profit at the time of writing.
The issue of profitability has been a problem since the halving event in April. Since then, the average mining costs have been higher than the price of BTC, as shown by data from MacroMicro.
Interestingly, the difference between mining costs and BTC prices decreased in May but expanded again in June. In July, the gap narrowed considerably, suggesting that BTC miners could be nearing profitability once again.
Miners’ Struggles and Market Impact
On July 29, the average mining cost was $73.6K, compared to the BTC price of $68.2K. This represents an average loss of over $5000 to mine a single BTC on that day. The mining costs include mining rig operations and energy consumption, among other things.
Miners who are struggling may be forced to sell their existing BTC holdings to cover the operational costs. If more miners sell BTC to cover their expenses, it could put downward pressure on BTC prices.
The Miner-to-Exchange Flow metric tracks sell pressure from BTC miners. An increase in this metric means more BTC from miners has been moved to centralized exchanges for sell-offs, which could potentially lower the BTC price.
In contrast, a decrease in this metric suggests miners are withdrawing their BTC from exchanges. This indicates a bullish signal for BTC due to reduced sell pressure from miners.
This scenario has played out, as shown by the attached CryptoQuant chart. The Miner to Exchange Flow dropped slowly between July 1 and 20, corresponding to a relief rally that saw BTC reclaim $60K and surge above $66K.
A rise in the metric between July 20 and 24 saw BTC retrace shortly as miners dumped more BTC in exchanges. However, the Miner to Exchange Flow has decreased sharply since last Friday, reinforcing a bullish sign for BTC as it reached $69K.
Based on current market prices, miners currently hold a 1.81 million BTC reserve worth over $124 billion. This supply can significantly impact BTC prices.
Recent data suggests that miners are nearing profitability again and are not selling off their BTC. This could provide the much-needed relief for BTC to rise further.
