The liquidity crisis in the bitcoin mining industry shows no sign of letting up. Indeed, statistics show that bitcoin miners are selling their coins at record levels last seen in 2016.
An investigation by Protos in October showed that most big mining players in the US are facing severe financial pressure, with some like Riot Blockchain being considerably underwater. Bitcoin miners’ daily revenue is currently sitting at 2020 levels or around $13.53 million every day.
Glassnode Analytics has also published figures showing that to cover costs, miners are selling more bitcoin than they’re mining.
Bitcoin mining hash rate is still at historic highs but this statistic could potentially be a bad sign when we consider current market conditions and other factors. Ever since China banned bitcoin, the hash rate in the US has increased, a development that has pushed up bitcoin’s overall energy costs, even in relative terms.
And while other countries, including Kazakhstan, Ireland, Canada, Germany, and Russia have decreased their hash rate, the bitcoin mining rate in the US is at record levels.
The biggest mining pool in the US, Foundry US, is a subsidiary of Digital Currency Group (DCG), which is currently in trouble over its bankrupt trading firm Genesis. DCG could cause widespread chaos in the market if it’s seen to be under critical financial duress with its most popular product, Grayscale Bitcoin Trust (GBTC), trading at a 42% discount to bitcoin’s price.
Grayscale has claimed that it holds all of its bitcoin — a total of 635,235 coins — on Coinbase in an effort to quash rumors that it can’t meet redemptions, but proof of addresses hasn’t been published.
Nor has DGC managed to dispel rumors that it’s short the $1 billion that it previously lent to Genesis which proceeded to lose it.