Bitcoin miners are selling more aggressively than at any time in the past seven years according to Charles Edwards, founder of Capriole Investments.
“If price doesn’t go up soon, we are going to see a lot of Bitcoin miners out of business,” Edwards said. “It’s a Bitcoin miner bloodbath.”
He has come up with a Bitcoin Miner Sell Pressure index. This is up 400% as of Monday to 3.86 from just 0.44.
The higher the index, the more miners are selling than usual, with it currently reaching 2016 levels.
Mining costs are currently above bitcoin’s price, a situation that has continued for now the fifth month with it deteriorating even further earlier this month as price plunged from $20,000 to $16,000.
Miners therefore may be nearing the stage where their cash reserves are depleted and their bitcoin reserves are starting to run low.
Iris Energy, an Australian bitcoin miner, is the latest to note that they might be unable to service their debt obligations.
That follows a similar warning by Core Scientific, a much larger miner, who last month stated it was at risk of default.
Bitcoin’s hashrate has slightly fallen recently from 271 exahashes, a new all time high, to 256.
Different miners however have different cost basis, with Edwards putting it in a range between $16,900 and $28,000.
Bitcoin’s price has now fallen below even that lower range, which might indicate all miners are running at a cost unless they have free energy through hydro-power investments or through students mining in dormitories.
Once such inefficiencies are cleared out by miners with higher costs either going bankrupt or turning off their gear, the sell pressure should reduce as costs lower for other miners.
An eventual balance is then reached, which many thought was at $20,000 until the FTX debacle.
That debacle may have hit miners sentiment, which may explain this high selling as they might have thought bitcoin would go even lower.
Bitcoin has slightly recovered instead, with it to be seen whether this new balance will hold as miners seemingly capitulate.