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24th June 2024 > > BTC miners.


BTC miners are struggling, closing down rigs, and selling off stock.

Market Snap

Market Wrap

I think we can be fairly sure from this morning’s price action that the markets are expecting yet more outflows from the spot BTC ETFs. There is a surprising lack of engagement from the short side to this sell-off with a firm move back to neutral for the perpetual futures funding rate, which is a shame, because a short squeeze higher is just what we need right now.

Curious Cryptos’ Commentary – BTC miners

The most obvious and immediate impact of the halving is on the BTC mining companies, whose reward is now 3.125 BTC per block, plus transaction fees.

The halving date does not come as a surprise to anyone, so I can only assume that the miners that are managed well have a mitigation strategy in place. But it appears that this does not apply to the entire cohort.

Embedded in the BTC code is a concept known as difficulty. The difficulty level is periodically adjusted to try to ensure a new block is created every ten minutes, which it does exceedingly well. Difficulty today is measured in the trillions of hashes, having started very low back in 2009 when Satoshi Nakamoto was the only miner on the planet. In general, over time, the amount of computing power allocated to the BTC network increases, leading to an increase in the difficulty. However, since the halving there has been a drop in difficulty from 88 trillion hashes to 83 trillion:

This indicates that miners are shutting down rigs in the face of reduced revenues. But they are also selling off their stock of BTC, to the tune of $2bn so far in June. It is true that MicroStrategy just bought $800mm of BTC, but with spot ETF outflows showing no sign of abating any time soon, this downward price pressure is set to increase in the short-term.

Curious Cryptos’ Commentary – The techies

The techies are overwhelmingly bearish right now. This is an example from 10x Research, calling for a frightening target of $45k, clearly not an outcome that justifies the name of the firm:

Frightening that is for the leveraged players, and the speculators. For investors with a long-term view, DCA will do its job very nicely.

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