Bitcoin Miners are Profiting; What Happens to the Money?

Bitcoin miners are substantially withholding revenues, a pattern noted by crypto markets monitoring company Glassnode. Glassnode data demonstrates that events that are critical to on-chain trends can also be well-correlated with real-world demands.

The Bitcoin mining ecosystem suffered a major setback in the second quarter as a result of Chinese authorities' crackdown on miners. Miners, in response to the government's leave notice, embarked on the greatest exodus in history, resulting in the unplugging of millions of hardware equipment. As a result, mining difficulty decreased significantly, reaching an all-time low of 13.67 T in July.

It's worth mentioning that decreasing mining difficulty effectively increases the profitability of miners already operating on the network. According to Glassnode data, “miner USD revenue per hash has now recovered to July 2019 levels of $380k per Exahash, making running miners historically extremely profitable.”

Regardless of this fact, the Bitcoin network's health is gradually returning to normal, with difficulty returning to pre-hunt levels.

“The Bitcoin mining sector is continuing to rebound after more than half of the hash power was lost during China's Great Migration. The 14-day median hash rate has risen to 128 EH/s, which is roughly 29% behind the all-time high and represents a 42 percent recovery from the July lows.”

The increasing hashrate is suggestive of miners relocating to nations such as Canada, the United States, and Kazakhstan, among others.

Indeed, miners are reaping the benefits.

Bitcoin miners are especially profiting, with rumours abounding as to the destination of the proceeds. On-chain data indicates that over 2,900 BTC have been spent from miner balances thus far, equating to approximately $150 million at the digital currency's current price of $51,727.46.

Glassnode gives a list of potential recipients of the funding.

“This might be a result of afflicted Chinese miners acquiring fiat liquidity to cover expenditures, or operating miners profiting and de-risking following the May sell-off. Additionally, it is anticipated that some of this revenue will be redirected towards facility expansion and the acquisition of hardware from second-hand or fresh ASIC markets.”

Despite this spending, the miner's nett position is currently balanced, with coins mined and spent balancing each other out.

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