Bitcoin [BTC] Miners Start A Selling Spree, Is A Sharp Sell-Off Ahead?

By Bhushan Akolkar
November 3, 2020 Updated November 3, 2020
Best In

Trending Tokens




White House Drafts Policy To Reduce Crypto Mining's Energy Consumption And Emissions

Soon after Bitcoin (BTC) crossed $14,000 last Saturday, it has been under pressure and has corrected 500 points since then. Over the last week, Bitcoin miners have kicked-off the selling spree while liquidating their inventory of over 1000 BTC.

Some of the cryptocurrency analysts have been already pointing at the BTC correction in this short term. It has been the end of the rainy season (April-October) in China’s miner-dominant Sichuan region. Thus, many miners prefer switching off their rigs that results in a significant hashrate coming offline.

By the end of October, the Sichuan-based miners usually tend to move to other northern regions of China like Xinjiang and Inner Mongolia due to the region’s competitive electricity rates.

The Transiting Hash Rate Results In Drop Of Mining Difficulty

Since the last mining difficulty adjustment last month on October 18, the Bitcoin price has surged by 20%. John Lee Quigley, director of research at HASHR8, said that it’s going to be a great time ahead for miners as the difficulty is like to drop by 15%. In a note published on Monday, November 2, Quidley writes:

“The next difficulty epoch will be an extremely lucrative period for Bitcoin miners as blocks will likely be much faster, bitcoin price may remain elevated, and input costs will significantly drop”.

He further explained that miner profitability has significantly surged over the last month. However, the revenue growth still remains blunt with slower block times. But as the input costs of mining drop considerably, Quigley expects a significant hashrate to come back online as “a myriad of inefficient miners will be able to mine profitably again,” he says.

As more hashrate comes online, it will reduce the block times thereby increasing profitability for miners. The transition between Sichuan and northern China usually takes around one week and thus as more hashrate comes online, we can expect the Bitcoin (BTC) price to surge ahead. However, we can see short-term pressure on the Bitcoin price until the rigs go online again.

America’s Bitcoin mining giant Marathon Group is piling up the inventory and has put massive orders for the Bitmain Antminer S19-Pro to make the most of this situation.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

Next Story