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The first quarter of the year saw mining revenue slump significantly, hurting the majority of mining companies that rely on revenue generated from the sale of mined Bitcoin. While this trend didn't change in Q2, the past few weeks have brought some relief with daily mining revenue figures and Bitcoin prices turning the corner. The recent minor gains in the asset price have provided an opportune moment for miners to sell part of their holdings at slight profits.
Miners are still selling more than they are mining, Hash Rate Index reports
The recently released Q2 results filings for Bitcoin mining giants reported a general increase in Bitcoin production activity (mined Bitcoin) relative to the prior-year period. Further, the quarterly results also showed a swell in the reported revenue year-on-year basis. A Hash Rate Index report published on August 9, however, shows the majority of mining firms still sold more BTC than they mined in July.
Core Scientific led the charts in both BTC mined and sold, with respective figures of 1,121 and 1,975 BTC. Of the reviewed public miners, only Canada-based Hut 8 and Marathon Digital, which mined 330 BTC and 72 BTC, respectively, did not sell. A comparison of mined vs sold tokens placed Bitfarms at 500 – 1623 BTC, Riot at 318 – 275 BTC, Hive at 280 – 427.9 BTC, Argo Blockchain at 219 – 887 BTC, CleanSpark at 384 – 426 BTC, and Iris at 154 – 154 BTC. Demonstrating how massively the miners have dumped, a total of 5,767.9 BTC had been sold as of the end of July against 3,478 BTC mined in the same period.
Thus far, Hut 8 remains one of the few crypto miners that have resisted the pressure to sell and persisted with a HODL strategy. In July's production and operation update, the firm revealed that it added 330 BTC in July. The accumulation at a rate of 10.61 BTC per day increased its stash to 7,736 BTC, which has been fully custodied. This included revenue generated from the ETH mining operations, which are paid for in BTC.
Core Scientific also reported its July updates on the same day, disclosing that its Bitcoin mining across July grew by 10.4%, increasing from 1106 BTC in June to 1,221. This was despite the much powered-down operations the firm has been subjected to due to the heat wave situation in Texas. The 1,975 Bitcoin it sold generated $44 million, leaving 1,205 Bitcoin and $83 million in the firm's treasury. The firm revealed that it used part of the proceeds to cover the cost of 100,000 GPU mining equipment it bought in 2021 and capital expenditures connected to expanding the capacity of its data centers.
The poor Bitcoin performance this year isn't the only plight some miners have had to contend with. Notably, most industrial-scale crypto mining firms have had to slow down their operations in the US to bear with the ravaging heat wave. Hash Rate Index's report noted that the adjustment is necessary to reduce stress on the grids and achieve stability.
Declining miner reserves are creating selling pressure
The miner reserve, which tracks the BTC volume held in the wallets of all miners, charted a gradual increase as Bitcoin consolidated in the 20k- 22k range for the better part of July. However, the let-up in the market when Bitcoin clawed back to 24k this month caused a shift in the behavior of Bitcoin miners. A post on CryptoQuant shows that miners started dumping as the price rallied, and consequently, the miner reserve volume declined.
Some analysts contend that a persistent distribution phase could, in the short term, drag down the recovering BTC prices. This is because miners generally move Bitcoin held in their reserves when they want to sell, and past trends show that selling pressure leads to a decline in asset prices. Such an outcome would hurt Bitcoin holders anticipating decent gains in the near term, considering the leading cryptocurrency is still yet to establish any solid footing above $25k.
BTC mining stocks on a recovery path
Meanwhile, the latest data suggests that Bitcoin mining firms have been pumping with the stock prices of some companies more than doubling since mid-July. Yahoo Finance data shows that the stock price of Nevada-based miner Marathon Digital surged by 144.18% across the 30 days ending on August 12.
Core Scientific, Hut8 and Riot Blockchain saw similar performances in their stock price, up 118.18%, 141.31%, and 106.875%, respectively. This rise in Bitcoin mining stocks has been chalked up to improved market prices and increasing mining profitability.
Mining profitability, hashrate and difficulty
Data from Bitinfocharts confirms Bitcoin mining profitability has picked up after reaching a 22-month low on July 1.
Bitcoin mining difficulty, on the other hand, has generally been tracing a descending path and was at its lowest since April on the last week of July. The average hashrate, a metric representing the computational power, appeared to be recovering from the July 14 low but has crashed again heading into the new week.
To learn more visit our Investing in Bitcoin guide.
Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.