Bitcoin miners are in the green again following BTC’s massive recovery over the past week. On-chain data suggests miners’ BTC sales to upgrade machinery and sustain operations are ending.
The Miner Sustainability metric, an indicator that evaluates the profitability of mining activities after accounting for the cost of hardware and operations, shows that this cohort of market participants is now fairly paid. This marks miners’ return to profitability for the first time in a month.
Miners Are in Profit Again
According to the latest Bitfinex Alpha report, miners have been operating at a loss since the Bitcoin halving in mid-April. This led to a period being marked as unsustainable for mining operations. With this cohort of market participants having completed equipment upgrades, operational costs are expected to be reduced and efficiency enhanced.
The rise in the Miner Profit Sustainability metric will stabilize miners’ financial position and possibly positively influence the crypto market by reducing the need to sell BTC holdings to cover operational costs.
Bitcoin miners have contributed significantly to selling pressure since April. Historically, this cohort of market participants has been a major source of sell-side pressure after each Bitcoin halving in a bid to maintain profitability after block rewards are slashed. However, their impact and influence on the market diminished after each halving due to the consistent decline of block rewards, which decreased the number of BTC they could sell.
“Despite a brief spike in June, the Miner Position Index has now returned to its equilibrium point. This change marks a notable shift in market dynamics, indicating that other forces are now playing a more substantial role in determining the price of BTC,” Bitfinex analysts said.
A Shift in Sell-side Dynamics
One of the major forces now determining downward pressure on BTC’s price is U.S. spot Bitcoin exchange-traded fund (ETF) outflows.
After BTC hit an all-time high in March, ETF outflows dominated the market and overshadowed sell-side pressure from miners. This has shifted the dynamics of the sell-side, with institutional and government BTC movements now playing a more significant role.
Regardless, BTC has been in recovery since July 13, reaching a 38-day high of $68,560 after a 28% rally from its local bottom. Analysts said the uptrend signals strong bullish sentiment in the market, setting the stage for further rallies in the coming months.