The increasing pressure for Bitcoin (BTC) miners to sell their holdings could further exacerbate the bear market, American multinational investment bank JPMorgan Chase strategists said in a note on June 24. 

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Led by Nikolaos Panigirtzoglou, the strategists believe miners are selling their Bitcoin (BITCOMP) holdings to cover operations costs.

According to the strategists:

Offloading of Bitcoins by miners, in order to meet ongoing costs or to deliver, could continue into Q3 if their profitability fails to improve.

Panigirtzoglou and his team said public-listed miners started selling in May and June. On the other hand, private mining companies have sold larger chunks of their block rewards due to liquidity constraints.

Per the strategists, the effect of miners selling their BTC holdings impacted the flagship cryptocurrency’s May and June prices. If BTC fails to recover in the short term, the strategists believe the selling pressure could continue.

At the time of writing, BTC is changing hands at $21,291.97 after gaining 0.36%. This modest recovery comes after the cryptocurrency plunged and traded as low as $17,708.62 on June 18. Nonetheless, BTC’s current price represents a 55.5% drop year-to-date.

The only thing standing between more selling is a drop in the cost of mining. According to JPMorgan (JPM), production costs have fallen to $15,000, down from $18,000-$20,000 earlier this year. This drop is likely due to improved, energy-efficient mining rigs, which create a narrow window for profitability. 

Miners Forced to Change Strategies

The crypto winter has seen many BTC miners, especially in China, sell their rigs at throwaway prices. Surviving players in the industry have had to embrace different approaches to remain afloat. An example is Toronto-based Bitfarms, which adjusted its HODL strategy to improve liquidity and bolster its balance sheet.

Specifically, the company sold over 3,000 BTC for around $62 million. This sale left Bitfarms with 3,349 BTC. Additionally, the firm decided to stop HODLing all its daily BTC production.

Bitfarms CFO Jeff Lucas said:

While we remain bullish on long-term BTC price appreciation, this strategic change enables us to focus on our top priorities of maintaining our world-class mining operations and continuing to grow our business in anticipation of improved mining economics.