Bitcoin’s price position in April 2020 was extremely critical. With the price hovering just under $7700-$8000, the main concern for several analysts was the capitulation of miners following the halving event. On 11th May, the block rewards of miners were cut short to 6.25 BTC per block and many expected BTC to witness a bearish pullback after the halving. Mao Shixing, Co-founder of F2 Pool had stated,
“If the price of Bitcoin maintains at the current range of $6,000 to $7,000, more machines will inevitably be shut down after the halving. The March 12 crash has already caused a number of machines to shut down. But we may still try to improve their efficiency and reduce their costs.”
Luckily for Bitcoin, the rally over the past couple of months has been extremely fruitful as the digital asset recently went to register new year-highs.
With the price improving in the charts, miner profitability was on a high as well.
As revealed by Charles Edwards of capriole.io, Bitcoin production cost of electricity at the moment could be countered with BTC’s value at $7250 whereas Bitcoin was currently value way above, between $11,000 and $12,000.
However, despite mining being more profitable, according to recent data from Glassnode, miners seem to be getting a little anxious with the instability indicated by Bitcoin.
As illustrated in the above chart, Bitcoin miner’s transfer volume from miner’s address to exchange address is steadily rising after dropping down to a new low back in June 2020. The transfer of volume from miner’s addresses to exchange indicated that some miners were possibly cashing out on their profits, hence necessarily conducting a certain level of capitulation. The 7-day moving average volume has almost doubled in the past couple of months, increasing from 170 BTC in June 2020 to 310 BTC on 11th August 2020.
It can be speculated that the current volatility pictured by Bitcoin is leading towards this uncertain stance of miners. If BTC does not surge anymore this year, cashing out at the top of a bullish rally is a logical step for most of the miners.
However, it is also worth taking note that that net volume between capital inflows and outflows in miner addresses remains in the green that means BTC coming into miners’ address is still more than BTC going out.
Hence, at the moment only a minority of miners might be going out of business while a majority of them continued to incurred more incoming Bitcoin volumes.