Bitcoin (CRYPTO: BTC) miners, not unlike gold prospectors of yesteryear, get rewarded for their efforts via payments in Bitcoin.
You can see then how rocketing crypto prices last year drew in a large wave of new miners.
The world's top token by market cap commenced trading in 2021 for just under US$32,000, right around the current price of US$31,206.
But it was the meteoric increase in the price over the following months, which saw Bitcoin hit record highs of US$68,790 on 10 November, that really spurred new miners into the action and saw many existing miners expand their capacities.
Why then might they be selling their holdings today?
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US$6.3 billion in Bitcoin transferred to exchanges in May
Citing data from Coin Metrics, Bloomberg reports that miners transferred 195,663 of their tokens to exchanges last month.
At May's average Bitcoin price of US$32,000, that works out to just under US$6.3 billion.
No chump change, that.
While transferring to an exchange doesn't necessarily mean the miners will sell their holdings, the big spike in transfers has certainly caught crypto investors' attention.
So, what's happening?
Commenting on the multi-billion dollars in transfers in May, director of content at Compass Mining Will Foxley said, "I think miners are just talking about the macro environment and think it is probably prudent to sell Bitcoin in these levels in order to keep the operations safe."
Indeed, junior Bitcoin miner Cathedra Bitcoin sold most of its holdings to stay afloat.
"We have spent the last several weeks restructuring our balance sheet and operations to ensure Cathedra is well-positioned to endure a prolonged economic downturn," Cathedra CEO AJ Scalia said.
Costs up, returns down
Miners betting that the token would regain its 54% losses from 10 November's all-time highs are still waiting. And with global power prices surging – the vast computer arrays in mining operations use astonishing amounts of electricity – their costs are going up while their rewards have gone backwards.
And the publicly-listed miners are taking a second wallop from the struggling share markets, making capital raising more difficult.
If the Bitcoin price rebounds, we're likely to see the miners return to holding their tokens tight. But for now, many have little choice but to sell at the current prices to keep their operations running.
