Miners made the biggest withdrawal of funds in 2019, just as Bitcoin price was fighting its last to keep above $8,000. The accelerated selling of rewards may look like an episode of miners capitulating.
Bitcoin Price Forces Miners to Sell
The sum of $20 million looks small in comparison to the entire BTC activity, which is above $19 billion per day. However, miners selling their current rewards is a signal that their faith in bitcoin price is shaken.
2/ Untagged miner wallets saw $20M of net outflows. While it might not sound like a lot, comparatively, it is the 2nd largest single day of net outflows from untagged wallets in 2019 in USD terms. pic.twitter.com/KTKE7dB5O4
— elias.eth (@eliasimos) November 20, 2019
Larger miners may afford to finance their operations, but small ones may be pressed to close doors, if bitcoin price falls too far down. Currently, miners produce more than 96 quintillion hashes per second, as the network rate is near its peak.
However, most blocks go to the largest pools, and small miners grab a fraction of the rewards. It is possible that small miners are starting to give up, adding to the selling pressure on the market. At current BTC prices of $7,987.88, the profitability of Antminer S9 is not appealing – bringing an annual loss of around $567. Investing in new, more powerful ASIC is happening only gradually, and is seen as a factor in the health of the Bitcoin network.
Halving to Discourage Smaller Miners
Miners moving away is an expected event after the halving, which is expected around May 15. At that point, pools will compete for just 900 BTC in rewards per day. With a bearish outlook,