Bitcoin Miners Sell More Coins Than They Minted

Bitcoin miners, the people responsible for the creation of new Bitcoins, have increased the number of coins they sell.

Last week the Bitcoin miners sold over 10% more Bitcoins than they have minted, as shown in the metrics of a crypto asset data company ByteTree.

The website tracks Bitcoin wallet addresses linked with Bitcoin miners. According to its statistics, the Bitcoin miners generated 6.050 Bitcoins during the last week. Meanwhile, the “first spend” metrics show that they sold 6.740 Bitcoins during the same seven days.

The “first spend” metric includes the newly minted Bitcoins, that have recently been spent for the first time ever since the moment when miners received them and stored them as an unspent inventory.

The statistics have gained attention on Twitter. Some crypto users claim that the fact of miners selling more Bitcoins than generating shows the capitulation of some smaller miners.

The prediction most probably might come out of the context, that Bitcoin mining becomes the unprofitable activity. Since the Bitcoin block reward was cut in half after the third Bitcoin halving this May, the BTC mining could have been perceived as an activity that is tight to pay off. Having in mind that electricity costs vary in various countries and the hardware used for mining has to be highly powerful to generate profit.

Although the miners’ market might see some corrections with the withdrawals of some inefficient miners, the bigger picture seems to look optimistic, according to ByteTree. As the company claims on Twitter, the on-chain data of miners’ selling more Bitcoins signals the bullish trend.

Historically, Bitcoin miners have been considered the key force behind Bitcoin’s price, as they generate new coins and increase their supply to the market. Since miners are forced to liquidate their rewards to cover the operational costs like the electricity bills, the level of their inventory (unspent Bitcoins) constantly changes.

Here comes the key metric – Miners Rolling Inventory (MRI), that indicates the miners inventory behavior. As shown by the ByteTree data, the MRI of the last seven days is approximately 110%. Furthermore, the same metric floats over 100% for 3 months already. This means that the miners started selling more Bitcoins than they generate even before the halving. And they continued to keep the same trend.

Although it might presume that the price of Bitcoin could drop due to the increased supply, the ByteTree’s research indicates quite the opposite. As the company states in its report:

It turns out that a high MRI doesn’t put pressure on the price, it is reflective of a strong market bid that the miners are comfortable to sell into. And when that bid fades, the miners hold back, MRI falls and inventories rise.

The company further explains that the cryptocurrency industry is creating value from establishing a wide network. If the demand is low, the market is tight, and selling assets becomes a challenge. And while the miners hold the majority of coins, there is no network to sell them as well. In the meantime, when the market is strong, the miners run down their inventory and sell coins.

Since the increased MRI indicated the strong bullish trend for Bitcoin, the other post-halving metrics are showing a stabilization after the post-halving decrease. As shown in the data of Blockchain.com, the total Bitcoin hash rate was over 102 TH/s on June 1. The number indicates a more than a 10% increase since the last week of May when the hash rate has dropped to slightly over 90 TH/s.

Meanwhile, the Bitcoin mining difficulty – the metric that indicates the level of competition between bitcoin miners – hasn’t shown the significant changes and decreased slightly from 15.99 trillion (T) at block height on May 21 to 15.7 T on the first day of June.

The average Bitcoin transaction fee, however, decreased significantly to $2.47 this Monday and reached the same level as on the day of Bitcoin halving.