Bitcoin Miner Activity Trends Amid Halving Preparations

Bitcoin miners are gearing up for reduced halving revenues, leading to a surge in their activity. Analysts at Coinfactiva.com reported a significant increase in transactions in mid-April, with approximately 40,000 transactions executed daily. A majority of the coins were directed towards exchanges, impacting prices negatively.

Reserve Depletion

The selling of both newly mined and reserved coins resulted in a decline in miners' total reserves, which fell to 1.82 million BTC, marking the lowest level since January 2022.

Positive Initial Halving Response

The response to the initial halving was optimistic. The introduction of the Runes protocol coincided with a spike in network activity and fees. Miners earned 37.6 BTC in fees for the first block of the new era, significantly higher than the 3.2 BTC from finding the block. The average fees surpassed $120 on that particular day, setting a new record.

Runes Protocol Popularity Fades

Although initially popular, the excitement surrounding the Runes protocol quickly diminished. While initially occupying 80% of block capacity, Runes now only make up 3-4%.

Decline in Fees

Network fees saw a decline to minimal levels, leading to a record low terahash profitability dropping below $0.05.

Miner Challenges

The current scenario poses challenges for miners, with many struggling to sustain operations and resorting to shutting down equipment. The total network power witnessed a 16.4% decrease since late May, reaching 581 EH/s.

Long-term Impact on Bitcoin

Despite the immediate challenges, the long-term impact on Bitcoin is expected to be positive.

Industry Debt Concerns

A significant issue in the industry is the substantial debt burden faced by publicly traded miners, constituting a third of the total power. Often, these miners overlook risks in pursuit of high metrics and investment attractiveness, leading to coin sales during crises. An example of this is the sell-off that followed Terra's (LUNA) crash in May 2022 and Core Scientific's subsequent bankruptcy.

Balanced Market Dynamics

The analysts at CoinFactiva anticipate that lower revenues will deter miners from accumulating coins, resulting in more balanced and predictable market pressure, irrespective of ongoing trends.

Source: Coinfactiva.com - Bitcoin Mining Faces New Challenges, Terahash Profitability Reaches Record Low