[Bitcoin Now] Miner Withdrawal Volume Increasing... Concerns Over Further Price Decline

Miner Profitability Declines
Bitcoin Price < Mining Costs

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Recently, as Bitcoin prices plummeted, the amount of Bitcoin withdrawn from miners' wallets has increased. When the number of Bitcoins withdrawn from miners' wallets rises and transfers to cryptocurrency exchanges increase, selling may occur, raising the possibility of a price drop.

According to cryptocurrency data firm CryptoQuant on the 21st, the total amount of Bitcoin withdrawn by miners the previous day was 3,001. On that day, the Bitcoin price was around $20,050 (approximately 26.44 million KRW), while on the 16th of this month, when the price was about $200 lower, approximately 5,939 Bitcoins were withdrawn. Compared to the beginning of this month, when Bitcoin prices were around $29,700 and withdrawals were 1,885, these figures represent increases of 1,116 and 4,054 respectively. On the 9th of this month, before the $30,000 level collapsed, a total of 1,507 Bitcoins were withdrawn.

This increase in withdrawal volume appears to be influenced by the sharp decline in profitability for Bitcoin miners amid a downturn in the cryptocurrency market. According to data from the global economic data analysis platform MacroMicro, as of the 19th of this month, the average Bitcoin mining cost was $24,129, which was higher than the Bitcoin price of around $20,050 at that time. Since the beginning of the year, the average Bitcoin mining cost has ranged between $20,000 and $33,500, with Bitcoin prices mostly higher than these costs. However, due to inflation concerns following the U.S. Consumer Price Index (CPI) reaching a 41-year high in May, Bitcoin prices dropped to the $26,700 range on the 12th, while mining costs reached the $29,400 range, causing a reversal. On the 17th, mining costs were about $10,000 higher than the Bitcoin price.

The Bitcoin hash rate, which refers to the computational power used for mining, is also steadily declining. According to cryptocurrency mining information site CoinWarz, as of 12:18 AM local time on that day, the Bitcoin hash rate was 203.78 exahashes per second (EH/s). This is a decrease of 2.16 EH/s compared to the previous day and 43.73 EH/s lower than on the 19th of this month. A declining hash rate indicates reduced profitability in Bitcoin mining, leading to lower competition. Bitcoin is designed so that the hash rate value decreases as fewer miners participate.

Meanwhile, Bitcoin is hovering in the $20,000 range. According to the global cryptocurrency market tracking site CoinMarketCap, as of 11 AM on that day, the Bitcoin price was $20,653. Although it fell to the $17,000 range on the 19th, buying interest at low prices helped it recover to the $20,000 level.

According to cryptocurrency data provider Alternative, the Fear & Greed Index, which measures investment sentiment toward cryptocurrencies, remained at 9 points (extreme fear) on that day, the same as the previous day. Alternative's Fear & Greed Index ranges from 0, indicating extreme fear and pessimism about investment, to 100, indicating optimism.