Bitcoin diggers prepare for belt-tightening as profitability drops drastically

The latest weekly report by Glassnode shows that Bitcoin miners’ incomes are 61% lower than their yearly average.

The Puell Multiple reveals that diggers’ income shrinking is now greater than during the Great Migration of May-July 2021 when China introduced a blanket ban on crypto mining. The current drop is also inferior than during the March 2020 COVID-19 crash, although bear markets in 2014-2015 and 2018-2019 have been definitely inferior.

This indicator calculates how much profit mining pools currently make contrast to the 365-day historical average. When the metric’s value is too high, miners have a motive to expand their mining rigs and sell some crypto to profit from the bull drift. Similarly, the low value means that many miners go offline as revenues decrease, leading to fewer coins being issued.

The chart also includes a struggling Ribbon Compression, an indicator that creates a band of moving midpoint of mining difficulty to predict Bitcoin price. The current shrinkage suggests that diggers sell their bitcoins to balance costs and then capitulate.

As electricity charges rise and profits decrease, many mining companies are forced to trade their coins for fiat to make ends meet. For instance, the largest Bitcoin digger in North America, sold almost half its Bitcoin reserves for about $62m to lessen debts. The company is adjusting its “hodling” master plan to “improve liquidity and strengthen its balance sheet,” the press release reads.

“While we remain hopeful on long-term BTC price valuing, this strategic exchange qualify us to focus on our top priorities of maintaining our world-class quarry operations and continuing to grow our business in expectation of improved mining economics.”