Bitcoin mining companies have been forced to sell their cryptocurrency holdings as plunging prices, rising energy costs and increased competition take their toll on mining profits. The number of tokens sent by mining companies to cryptocurrency exchanges has been rising steadily since June 7, suggesting that more mining companies are clearing tokens on exchanges, according to researchers at cryptocurrency research firm MacroHive. Meanwhile, an analysis by Arcane Research, a blockchain data Research firm, noted that several publicly traded bitcoin miners sold all the coins mined for the month in May due to a 45% price plunge.
Bitfarms(bitF.us), Riot Blockchain(riot.us), and Core Scientific(Corz.us) have announced bitcoin sales.
Shares of listed mining companies have been hit even harder than bitcoin. The Valkyrie Bitcoin Miners ETF(WGMI.us) is down 59% this quarter, while Bitcoin is down 53%.
Arcane analyst Jaran Mellerud said mining profits deteriorated in June, meaning mining companies are likely to sell more bitcoin.
The cryptocurrency mining market expanded rapidly in 2021 as the price of Bitcoin more than quadrupled. But as the number of mining companies has increased too quickly, mining has become harder, putting pressure on their profit margins.
High energy prices have also hit mining companies, according to the Cambridge Bitcoin Power Consumption Index. Together, these mining companies are estimated to consume more electricity than the entire Country of the Philippines.