The economic turmoil roiling the cryptocurrency markets these days has forced one group of long-term HODLers to finally embrace selling.
According to Reuters, Bitcoin miners have started selling their holdings amid a wider downturn in the crypto markets and drastic drop in Bitcoin's value over the past two months. Earlier this June, Bitcoin's price briefly plunged to an all-time low, even sliding below $17,800. The recent market downturn has changed the minds of some inveterate HODLers, with some Bitcoin miners now espousing the view that it might be better to cash in on their losses to prevent further erosion of their investments.
In crypto parlance, HODLing refers to a buy-and-hold strategy where investors choose not to sell their holdings as the digital asset prices sharply plummet. Many perennial HODLers also stay the course due to a wider belief that fiat currencies may someday be supplanted by cryptocurrencies.
According to market research firm Macro Hive, which has documented that Bitcoin miners have increased their selloff since June 7, miners have moved toward liquidating their holdings on exchanges.
With Bitcoin prices tanking this past May, Arcane Research points out that multiple Bitcoin miners have collectively sold the entirety of their output for the month.
"The plummeting profitability of mining forced these miners to increase their selling rate to more than 100% of their output in May. The conditions have worsened in June, meaning they are likely selling even more," Arcane analyst Jaran Mellerud told Reuters.
Among the chief concerns of miners is the rising costs of electricity that make their operations more difficult and expensive to operate. According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin mining takes up more energy than the entire country of the Philippines.
"If you're not at a very low-cost electricity area at this point, you've got to shut down," Chris Brendler, senior research analyst at D.A. Davidson, told Reuters.
"Over the past six months, hash rate and mining difficulty have increased while the price of bitcoin has dropped. These are both negatives for existing miners as both work to compress margins," Joe Burnett, analyst at bitcoin mining firm Blockware Solutions, told Reuters.