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I have earlier reported that the Bitcoin miners sold all the mined coins in May. And now more and more reports are coming in that just as I predicted they have started to chip away at their reserves.
Why are they selling their reserve?
This is the golden question. And I can only assume it is due to them not being able to take full advantage of the markets. Just like with most of us. Knowing when the top in a market is is more than just tricky. It is dam near impossible to be able to tell while it is happening.
The reason I am able to see this is they have depleted their cash reserves and now are forced to sell their Bitcoin reserve to be able to keep financing the mining operations. Or keeping the lights on if you will.
Looking at the future
What I have been able to learn while looking into this is that we are very close to most companies' break-even point right now. At least when it comes to their newer miners. But this means they are still not in the red, despite having to sell their reserve at bargain prices.
It does however mean that as long as Bitcoin keeps at this price, they will continue to operate. But there might be some older ASIC miners that will get turned off. Mining at a loss for shorter amounts of time is a gamble I think most of them are willing to take. As the loos on some of the newer older models probably will not be that great.
Have you bought anything in the current Bitcoin sale?
We have seen a drop in hashing power recently. Presumably, the oldest miners got turned off. But the longer Bitcoin keeps at this price the more sense it will make for the company to turn off more and more miners that are mining at a loss. Because their newest models are still reportedly mining at a profit.
The problem is it is hard to judge the impact of the companies selling their Bitcoins. Can it actually be they are selling a high enough quantity to keep the Bitcoin where it is, instead of it slowly being able to climb in price? Sadly I do not have enough data to say for certain, so I can only speculate. But I think it is a fair assumption to make. That they are actually prolonging the time Bitcoin will sit at its current levels.
While I think it is fairly likely we have reached somewhat of a bottom, at least according to most charts. This means the whales and the masses have to buy all new coins coming to market and then some. In order for the price to move out of this slump, it currently finds itself in. But I wonder if the masses will be able to consume the extra Bitcoin coming to market, or if it is a waiting game? Having to what for the mining companies to deplete their reserves.
What do you think about the current market? How long will the current Bitcoin price hold? Please share your thoughts
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