Why have the miners been dumping their bitcoin?Even though the public miners sold less than half the amount in July as in June, we still see that they are draining their holdings if we look at the percentage of the bitcoin production sold. The public miners sold 158% of their bitcoin production in July, making it the third month in a row where they sold more than 100% of production. There are two main reasons why miners have been dumping their bitcoin holdings:
- Funding expansion plans (de-risking): As I explained in this article, the public miners have significant upcoming expenses related to their massive expansion plans. There are three ways miners can fund capital expenditures: equity, debt, or internal capital. Historically the public miners have preferred to hoard internal capital in the form of bitcoin and instead raised equity or debt to fund growth. With capital markets drying up, miners are now forced to rely increasingly on internal capital. The public miners' expansion plans go several months into the future, and they are selling some bitcoin now to get their bank accounts ready for future dollar-denominated payments.
- Avoiding liquidation on bitcoin or machine collateralized debt (forced selling): Miners with significant BTC or machine collateralized debt positions were forced to sell BTC to avoid margin calls. The miners with the largest positions of such precarious debt were Core Scientific and Bitfarms, which sold 9,903 and 3,353 BTC in May and June.
Source: Public miners’ monthly production updates