Bitcoin miners may soon be compelled to offload significant portions of their Bitcoin (BTC) holdings as they face substantial revenue declines, according to data from crypto research and analytics firm Kaiko.

Bitcoin miners derive their income primarily from two sources: mining rewards and transaction fees. However, recent weeks have seen a notable decrease in earnings from both avenues. This downturn has been exacerbated by April’s halving event, which reduced mining rewards from 6.25 BTC to 3.125 BTC per block. This pre-programmed reduction in rewards poses a considerable challenge for miners, who must cover substantial operational costs.

Kaiko's latest report highlights the financial pressures faced by miners following the halving event. “The halving has typically been a selling event for Bitcoin miners as the process of creating new blocks incurs significant costs, forcing miners to sell to cover costs,” the report states. This situation is compounded by a decline in revenue from transaction fees, which miners earn for prioritizing transaction processing. In the first week of May, profits from transaction fees were notably lower than earnings from mining itself.

The potential for a substantial sell-off by miners could have a pronounced impact on the broader crypto market. Kaiko points out that a significant sell-off would come at a time of lower market liquidity, heightening the potential for dramatic market fluctuations. For instance, Marathon Digital, one of the major mining companies, holds $1.1 billion worth of Bitcoin. Even selling a fraction of its holdings could trigger significant market movements.

As miners grapple with these financial pressures, the industry is closely watching for signs of increased selling activity, which could further destabilize an already volatile market. The situation underscores the complex dynamics at play in the cryptocurrency sector, where operational changes and market conditions can quickly influence asset prices and trading behaviors.