Mining Costs Exceed Bitcoin Price by $10,000
Institutional Investor Inflows Expected Upon Spot ETF Listing
The amount of Bitcoin held by miners is gradually decreasing. If miners reduce their holdings and sell Bitcoin through virtual asset exchanges, it could lead to a price decline, potentially affecting investor sentiment.
According to virtual asset data company CryptoQuant, as of the 4th, the total Bitcoin holdings of miners were recorded at 1,840,079. Miner holdings have been on a downward trend since recording 1,846,147 on the 24th of last month. When miner holdings decrease, the amount of Bitcoin flowing into exchanges increases. Until the 30th of last month, the number of coins moving from miner wallets to exchanges was 121, but the next day it rose to 1,652, and on the 1st of this month, it increased further to 2,997.
When Bitcoin moves from miner wallets to exchanges, it tends to lead to a price decline. On June 2nd, miner holdings decreased from 1,845,881 to 1,841,277, and Bitcoin’s price also dropped from the $27,200 range to the $25,100 range. On the 29th of last month, miner holdings temporarily increased to 1,844,970 before declining, and during the same period, Bitcoin’s price fell from the $27,700 range to the $25,900 range.
The recent inflow of mined Bitcoin into exchanges is interpreted as being due to Bitcoin prices being lower than mining costs. As losses from mining accumulate, miners are forced to sell Bitcoin. According to data from the global economic data analysis platform MacroMicro, as of the 30th of last month, the average Bitcoin mining cost was $38,269, which was about $10,000 higher than the Bitcoin price of $27,287.
Also, according to the Hashrate Index, as of the 5th of this month, the hash price was $0.60 per unit of daily computing power. It has maintained this level since the 1st of this month and recorded the same price from the 23rd to the 29th of last month. This is similar to the level at the end of last year when tightening concerns and liquidity crises hit the virtual asset market. Bitcoin is mined through computer calculations, with hashrate indicating the speed of Bitcoin mining, and hash price representing the revenue from mining.
Although the situation is difficult enough for miners to sell their Bitcoin holdings, the market is pinning hopes on the launch of a Bitcoin spot exchange-traded fund (ETF). The U.S. Securities and Exchange Commission (SEC) is currently reviewing Bitcoin spot ETF applications submitted by seven asset management firms, including BlackRock. The results are expected between the 16th and 17th of this month.
If the SEC approves as the market expects, it is anticipated that institutional investor funds will flow in. In its analysis report on institutional investor fund trends for the second quarter of this year, the Kobit Research Center under the domestic exchange Kobit stated, "Recently, a U.S. court ruled that the SEC’s rejection of Grayscale’s Bitcoin spot ETF approval violated the Administrative Procedure Act," adding, "This ruling confirms that the SEC’s logic distinguishing between spot and futures markets for Bitcoin ETFs is insufficient, making the approval of a Bitcoin spot ETF highly likely."
Earlier, the U.S. Court of Appeals for the D.C. Circuit ordered the SEC to reconsider the listing of the Bitcoin spot ETF application submitted by asset management firm Grayscale Investments. The SEC had been rejecting Bitcoin spot ETF listings, but the court has put a brake on that.
The Kobit Research Center predicts that if the Bitcoin spot ETF is approved, approximately $20 billion in funds will enter the market within one year of its launch. Jeong Seok-moon, head of the Kobit Research Center, said, "With growing institutional interest in virtual asset investment, if the Bitcoin spot ETF is listed on the U.S. stock market, the institutionalization of virtual assets could proceed more rapidly," adding, "Therefore, it will be an important turning point for the development of the virtual asset industry."
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