The Bitcoin ecosystem is gearing up for its fourth halving event, slated to take place in the next two weeks. In the backdrop of this upcoming significant development in the ecosystem, bitcoin miners have begun offloading their crypto holdings in buslk. There are several factors behind this BTC selling spree seeding from the mining community, including the intention of capitalising on the risen prices of BTC, clocked in the backdrop of the upcoming BTC halving.
The daily sales of BTC tokens sold by miners over the counter (OTC) have hit the mark of 1,60,000, which is the most since August 2023. The data was disclosed by on-chain analytics firm CryptoQuant.
In a thread of updates posted on X, the analytics firm said Bitcoin will soon be recording a significant drop in its transaction fees, which is believed to be pushing miners to bag profits from Bitcoin’s ongoing price spike. The average BTC transaction fees, the amount users pay miners for validating their transactions on the blockchain, stands at $2.864 (roughly Rs. 240) as of April 8.
Some miners are selling more #BTC before the halving. Daily sales to OTC desks hit 1.6K Bitcoin in late March, the most since August 2023. pic.twitter.com/4LDVjwMMyY
— CryptoQuant.com (@cryptoquant_com) April 5, 2024
Bitcoin halving is a pre-programmed automatic event put in place by its anonymous founder, who goes by the pseudonym Satoshi Nakamoto. Through this process, Nakamoto wished to ensure that the addition of new tokens in circulation slows down, maintaining the uniqueness quotient and value point for BTC tokens.
Bitcoin halving is automatically triggered after every 210,000 blocks are mined on the Bitcoin blockchain. After halving, the block reward obtained by miners is reduced in half, reducing their incentives for mining Bitcoin blocks and slowing down the addition of new tokens.
After this upcoming halving event, the reward for miners will fall from 6.25 BTC for each block to 3.125 BTC.
In conversation with Gadgets360, Parth Chaturvedi, Investments Lead at CoinSwitch Ventures, highlighted that since the last halving in 2020, the computational power required to mine a block along with the associated electricity supply and electrical infrastructure had risen by five times. Securing capital from selling their BTC tokens now, miners are looking to ensure that they can sustain their mining operations at reduced rewards and earnings.
“Generally, post halving, several small miners become uncompetitive and end up being merged or acquired with larger players,” Chaturvedi said. “We could expect unprofitable miners to go out of business post the halving and leaving the industry to witness a wave of consolidation.”
Bitcoin miners are also still facing headwinds from lower transaction fees and increasing mining competition, as per CryptoQuant, which is also another reason why miners are selling big portions of their BTC holdings to retain profits now that Bitcoin’s fourth Bitcoin halving is merely 17 days away.
In March, BTC price breached the mark of $73,000 (roughly 60.8 lakh) creating a new all-time high (ATH) after November 2021. Its previous (ATH) was above $68,000 (roughly Rs. 56.6 lakh). As of Monday, March 8, Bitcoin is trading between the price points of $66,570 (roughly Rs. 55.4 lakh) and $70,000 (roughly Rs. 58.2 lakh).