Bitcoin mining is seemingly becoming a game of survival for the fittest as the halving event draws close. New revelations indicate that the more energy efficient miners are forcing those with higher operating costs to shut down operations through coordinated efforts.
Miners selling high volumes of Bitcoin
There was a significant decline in Bitcoin hash rate this week in the backdrop of miners shutting down their machines. This led to a reduction of the total computing power on the network. The news did not seem suspicious at all as crypto experts and enthusiasts alike interpreted this as miners’ reaction to Bitcoin price sharp decline.
In a separate incidence on March 25, ByteTree Founder and Chairman, Charlie Morris noted via a tweet that bitcoin miners were selling more than they were mining. According to bitcoin data generated by ByteTree, miners sold 2,788 coins against a total 1,588 mined.
Morris’ observation did not raise eyebrows as the crypto twitter community replied to the tweet suggesting that miners operating in pools likely made the sales. Others claimed that the miners’ coins consisted a small proportion of the market volume and as such have insignificant impact on Bitcoin price.
Even Morris was of the same opinion as his tweet suggested that the market’s ability to absorb the excess supply was a bullish signal.
Miners bitcoin sales plot to shake off inefficient miners
Preston Pysch exposed the link between the two occurrences on March 27 via a tweet suggesting that higher cost miners were being shaken-out 50 days prior to the halving event.
According to the Bitcoin analyst, the more efficient miners were deliberately sabotaging their counterparts with higher operating costs by selling more Bitcoin than they were mining. This effectively creates an oversupply of the digital asset thus supressing prices. Under such low prices, the less efficient miners are unable to recoup their operating costs prompting them to shut down.
Pysch’s assertions are supported by ByteTree data that compares the number of bitcoin produced daily against miner’s first spend
Bitcoin generation vs miner’s first spend (Source: ByteTree)
The chart shows that the miner’s first spend remained relatively higher than the total generated for most parts of the last week. This data provides partial evidence that back Pysch’s claims.
Suggestions of a coordinated effort to drive out the less efficient miners is evidenced by the low prices at which the miners were selling their coins on first spend.
Bitcoin live price/exchange volume (Source: Morris twitter)
The chart shows that miners were selling Bitcoin at prices much lower than the daily averages. This provides further proof that there was a coordinated effort to supress the cryptocurrency’s valuation.
The recent revelation adds a new twist to the complex dynamics of Bitcoin and pokes fresh holes into the decentralisation narrative of cryptocurrencies.
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