The latest research by Arcane, a company that focuses on digital assets and bitcoin miners, indicates that exchange-traded bitcoin miners sold 100% of their mined cryptocurrencies in May due to low profit margins and market volatility.

The sales rate jumps dramatically by about 30% over what was recorded in the first four months of 2022.

HODL Strategy:

During the bull market, publicly traded bitcoin miners tended to hold the majority of their cryptocurrency when the overall landscape was bullish.

But when dark times came with the underlying cryptocurrency crashing below $30,000 in May, many miners were forced to abandon their HODL strategy by selling their cryptocurrency, according to the latest research by Arcane.

Read:Are there signs of a bull market for cryptocurrencies?

One of the main reasons behind the massive sell-off lies in declining profitability amid high retail and pessimistic market conditions.

The research indicated that extremely high profitability, as recorded last November, led to a huge investment in the production capacity of miners, resulting in an increased hash rate while the price of Bitcoin fell.

This phenomenon led to lower profit margins as miners were required to use more computational power to obtain equivalent output as they had done in the past.

Despite the advantages of access to cheap electricity and energy-efficient machinery, some miners are still struggling to generate net cash flow for their mining business as no decline has been shown in the Bitcoin hash rate.

Selling Bitcoin to Pay Off Debt:

It is worth noting that many bitcoin-mining and exchange-traded companies can easily raise capital when the crypto market remains bullish.

But if the opposite happens and the bitcoin price drops, that makes bitcoin miners sell everything they get from bitcoin to keep their track in the right situation and cover the costs of the mining process.

Read:Mining 91% of bitcoins…the rest is less than 1.9 million bitcoins

It is worth noting that miners have several options for financing their operations without selling bitcoin, for example, issuing equity, raising debt with their machines or bitcoin holdings as collateral.

But in the event that the decline of Bitcoin continues and continues to be so in the long term, this makes the company review its strategy and offer its Bitcoin for sale to cover costs, as mentioned above.

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