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Nearly $1 Billion in Bitcoin Sold by Miners After Price Spike

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  • Nearly $1 billion worth of Bitcoin were sold by miners after its price spike. 
  • The recent Bitcoin halving cut the miners’ rewards by 50%.
  • Experts are saying that Bitcoin’s price may get influenced by heavy miner selling.

Shortly after Bitcoin’s price jumped significantly, a lot of Bitcoin was sold by miners for close to $1 billion worth. This wave of selling began from April 18 to 24, with these miners reportedly sending approximately 14,000 Bitcoins to centralized exchanges.

Bitcoin was trading at around $67,000 at that time, so the amount sold was roughly worth about $910 million. For many miners, this was an ideal time to sell some holdings and book profits.

CryptoQuant Reports Decline in Miner Reserves

During the recent market sell-off, Analyst Ali posted on X data from CryptoQuant, which reported a steep drop in miner reserves — which are essentially the amount of Bitcoin still held. This implies that these miners were preparing for an income shortfall post-halving, so that they can have funds to continue their operations.

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Source: X @ali_charts

That seems concerning; however, crypto experts believe the market is now strong enough to handle large fluctuations. The combined buying power from institutional investors and BTC ETFs (exchange-traded funds) should be enough to stabilize the market during times when there’s a major sell-off.

But if miners continue to sell heavily, BTC’s price could come under selling pressure, and its short-term growth potential will be diminished. This could be a sign of substantial selling and ultimately serves to show how much effort miners need to invest in planning. 

Not only do their choices impact how their business operates, but they can also influence the average price of the entire crypto market.

How Bitcoin Mining Supports the Blockchain Network

Bitcoin is supported by a community of miners, and they play an essential role in the network’s function. Powerful computers are used by them to process transactions and run the network. In return, they receive new BTC. 

However, these rewards are not permanent; every few years, they are halved in an event — popularly known as a Bitcoin Halving. The latest halving, which happened on April 19 last year, reduced the reward from 6.25 BTCs per block to just 3.125.

Such a large decrease in income for miners means that when electricity and equipment costs are high, it cuts quite a bit into their profits. After of the halving, many miners were holding onto their coins in hope of selling at a better price, and it appears they took advantage of the recent increase in the cryptocurrency.

Analysts said this kind of behavior is not uncommon. During negative price movements, for example, miners begin to save BTC holdings before halving.

For instance, after the halving, when rewards are lower, they will sometimes sell some of their holdings just to remain financially stable.

Ethereum Miners Hit Back at Plan to Cut Miner Rewards by Over 70%

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A fresh proposal for an Ethereum improvement (EIP), aimed at reducing block rewards by a massive 75 percent, caused severe disapproval by Ethereum miners who claim that the move would jeopardize the safety of the network. Miners say that those responsible for the new EIP-2878 care less about the security of the blockchain and are more concerned about the interests of the investor.

The fresh EIP-2878 suggests proof-of-work validators reward be slashed by 75 percent, from 2 ETH per block mined to 0.5 ETH. The justification of this plot is to align Ethereum’s inflation index in line with that of Bitcoin and safeguard Ethereum’s power parities.

https://twitter.com/JohnLilic/status/1294600620847108096

The proposal was originally published on August 11 by ConsenSys Managing Director John Lilic and Ledger’s Global Head of Client Success Jerome de Tychey on the Ethereum Magicians Forum, where developers and miners can discuss its effectiveness. However, the responses of the miners since the proposal was made have been against it.

Ethereum miners worried fresh EIP might leave the network vulnerable to attack

In particular, Ethereum miners who use GPUs did not waste much time before hitting back at the fresh EIP. The primary concern of GPU Ethereum miners is the significant decline in block rewards reduction more than doubled the previous modification, which might facilitate a 51 percent attack on the Ethereum blockchain.

According to Time Beiko, the product manager at PegaSys:

“The biggest consideration, in my opinion, should be the security of the network (i.e. how do we ensure the likelihood of 51% attacks remains low, how do we keep a diverse set of miners on the network, etc.).”

Another user raised a different query in his argument against the fresh EIP, claiming that ASICs which are more profitable compared to GPUs would kick them out of the market if block rewards are reduced without changing the algorithm.

A drop to 1.5 ETH or 1 ETH would be more reasonable

The co-founder and CEO of Bit Capital Group, Jimmy Thommes, argued that the Ethereum network should stop trying to imitate Bitcoin’s inflation rate because it is an older network created under different ideologies. In addition, the fresh EIP makes Ethereum miners feel that they are taking advantage of it.

Indeed, most of Ethereum miners were not against the precept to reduce block rewards as Ethereum network does not have an inbuilt halving tool like BTC to curb inflation. The system is dependent on EIPs to curb inflation rates with proposed block rewards diminution. However, the majority of Ethereum miners offered a reduction to 1.5 to 1 ETH would be wiser.

Dogecoin Clinches Top Position Among Most Profitable Altcoins to Mine

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An altcoin that only started as a meme/joke coin in 2013, is gaining traction as one of today’s most speculated coins. Apart from its price rallying upwards by extreme percentages, Dogecoin sets itself apart as a profitable altcoin for miners. The original design of Dogecoin was inflationary, and this is the main factor in the mining benefits of the coin.

Dogecoin Value has Grown , Posting High Percentage Spikes Over the Past Few Weeks

Unlike Bitcoin, whose mineable limit is within a total supply of 21 million Bitcoins and only 6.25 Bitcoins per block reward (currently); Dogecoin’s mineable coins are unlimited and its blockchain pumps at least 10,000 Dogecoins into circulation every 10 seconds.

The value of the digital coin has grown and last week saw a 50% spike. Dogecoin has recorded the highest single day  gain since 2017 and according to google trends keyword search metric, “How to Buy a Dogecoin? “It rose from a score of 25 to 100. Therefore recording the highest possible popularity for a google search over the last one year. As a result, the performance has warmed up the cryptocurrency community including miners and traders. 

Factors to Consider Before Mining a Digital Coin

While the surging price of a coin is not the motivating factor surrounding a spike in the interest of the miner. Dogecoin has emerged as the favorite altcoin for crypto miners, given its high mining rewards that beat some of the leading coins, such as Bitcoin SV and Bitcoin Cash. Some of the factors miners consider before choosing a coin to mine are block reward, cryptocurrency price, equipment efficiency, halving and block generation duration. All these factors seem to be aligned in favor of Dogecoin. For instance, the altcoin has a block generation time of 60 seconds, and a block reward of 10,000 coins.

Conclusion

The coin’s scrypt protocol sets Dogecoin’s mining equipment apart, compared to other coins; because its equipment is affordable and efficient.