Bitcoin (BTC) mining difficulty hit an all-time high of 53.91 trillion units on July 12 after the last difficulty adjustment. It is a measure of how difficult it is to mine Bitcoin blocks.
The blockchain adjusts its difficulty level every two weeks to maintain the 10-minute processing time. As the computing power of the network increases, it adapts, making mining challenging and reducing profitability for individual miners.
The recent adjustment will increase the pressure on miners who have been selling their mined BTC since June. Some analysts suggest that the lack of accumulation by miners has likely limited the uptrend in BTC price.
With the recent difficulty adjustment, the profitability of medium and small miners is likely to fall into negative territory, which will force them to temporarily shut down some of their ASIC miners.
The possible capitulation of weaker miners could finally allow larger miners to amass Bitcoin, which could ease mining selling pressure.
Are the miners about to surrender?
Created by independent analyst Charles Edwards, the Hash Ribbon indicator tracks the 30- and 60-day moving average (MA) of the network’s hashrate. If the 30-day MA falls below the 60-day MA, it is a signal that miners may capitulate, meaning unprofitable miners are leaving.
The two lines are about to cross and the increase in difficulty could eventually be the trigger for weaker miners to surrender.
BTC/USD daily price chart with hash ribbon indicator. Source: TradingView
The exodus of weaker miners would bring more benefits to the more efficient miners, potentially allowing them to save some of their production rather than sell it.
Can Bitcoin Rise After Miners Stop Selling It?
Recently, miners were spotted dumping record amounts of BTC on exchanges. Listed miners sold 100% or more of their production in May, according to a report by K33 Research.
Monthly updates on bitcoin sold by public miners in 2022. Source: K33 Research
Also in June and July, the cumulative 30-day transfer volume of BTC from miner wallets to exchanges surged to a six-year high, suggesting that miners are likely to continue dumping their bitcoins at an alarming rate.
30-day cumulative BTC volumes transferred from miners to exchanges. Source: Bitcoin Magazine
Coin Metrics’ one-hop supply to miners, which represents the total amount in wallets that have received coins from mining pools, is also down to a yearly low. It shows that the miners have uploaded more coins than they are producing.
Related: Bitcoin’s Pre-Halving Rally May Begin Soon – Here’s Why
One-hop supply of miners. Source: Coin Metrics
While miners have resorted to selling, supply distribution data from on-chain analytics firm Santiment shows that bitcoin whales have done the opposite.
The most prolific BTC investors, often known as whales and sharks, whose addresses hold between 10 and 10,000 BTC, have added $2.15 billion to their holdings since June 17.
Additionally, bitcoins held by exchanges have also fallen below 2017 levels, suggesting investors are removing BTC from exchanges and increasing their illiquid supply.
While Bitcoin accumulation among whales previously pushed BTC’s price higher, this time it has remained in a tight range between $29,500 and $31,500, which may be partly due to miner selling pressure.
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This article is provided for general informational purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
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