Are Bitcoin Miners Taking Profits? Is the Crypto Rally Coming to an End?

Bitcoin miners, a crucial group in the growth and operation of the BTC network, have sprung up in different parts of the world in the past two years. According to aggregate data provided by hashrateindex, six ASIC financing deals were executed in 2020 worth $47.84 million. The following year saw 26 financing deals completed worth approximately $662.25 million.  Come last year, crypto miners raised a total of $641.80 million in 18 deals.

However, the situation turned for the worst after crypto prices significantly shrunk by the end of last year. As such, several crypto mining firms have filed for bankruptcy protection with others selling rigs to pay off their debts. The situation has been worsened by the rising global inflation that has resulted in high electricity bills. 

For instance, most updated Bitcoin mining rigs on average return a daily profit of about $5 depending on the location and difficulty.

Bitcoin Market in 2023

Fast forward to the fourth week of 2023, and Bitcoin price has gained about 34 percent to trade around $22.6k on Wednesday. As a result, most miners are offloading both old and newly minted coins to stay on top of their accumulated debts.

“The sentiment among miners is better than in a long time. For many bankruptcy threatened players, the sudden increase in the bitcoin price is a lifeline,” said Jaran Mellerud, an analyst at Hashrate Index.

Notably, the January 2023 Bitcoin rally has mostly been attributed to whale account accumulation in large quantities. According to on-chain analytics firm Santiment, Bitcoin whales have accumulated a total of 70k BTC in the past three weeks.