Bitcoin consolidation near July lows and low volatility have different effects on market participants

As miners close a losing quarter, data from crypto analytics firm Santiment shows that the number of whales owning the top cryptocurrency is on the rise.

Bitcoin whales have accumulated a maximum of tokens

Santiment notes that the number of bitcoin whale addresses holding between 10,000 and 100,000 BTC ($190,000,000 to $1,900,000,000) has reached its highest level since February 2021, as have addresses containing between 10 and 100 BTC (from 190,000 to 1,900,000 USD).

The analytics firm also notes that bitcoin addresses holding between 0.1 and 10 BTC currently hold 15.9% of the available supply of cryptoassets, which is an all-time high.

Conversely, smaller whales holding between 100 and 10,000 BTC control only 45.6% of the available supply of bitcoin, the lowest level since June 2019.

Santiment also adds that the market capitalization of stablecoins has reached its lowest level since December last year. In addition, the company notes that bitcoin is being withdrawn from exchanges.

"Bitcoin experienced a massive surge of coins leaving exchanges yesterday, the largest daily amount (40,572 BTC) in 4 months. The supply of coins on the exchanges decreased to 8.48%. As the exchange supply decreases, this reduces the likelihood of a future sell-off."

Miners survived a difficult quarter

According to a report from the Hashrate Index, bitcoin miners endured a tough third quarter when the cost of mining rose even though the price of BTC continued to fall. So the rate at which public miners sold mined BTC fell for the first time since May.

The best indicator of how unprofitable a quarter was is the price of the hash. This is the income that miners receive per unit of computing power. It has been in free fall since the beginning of the year.

The hash price of bitcoin continued to fall after the main cryptocurrency fell below $20,000 again. Due to the increase in mining difficulty, the price of a hashrate in the third quarter decreased by 5% from $79.60 per hour per day to $83.30 per hour per day.

The drop in the average price of a hashrate in USD between Q2 and Q3 shows a huge difference. In the second quarter, the average price of a hashrate in USD was $141.20 per hour per day. However, it dropped to $92.70 per hour per day by the third quarter.

The price of hash fell 73% year-on-year to $79.60/hour/day in the third quarter from $290.40/hour/day a year ago.

Rising cost of electricity

One of the reasons that forced the miners to fight for profitability was the increase in electricity tariffs throughout the United States. The average cost of industrial electricity increased by 25% from July 2021 to July 2022.

Several mining-intensive states such as Georgia, Kentucky, Texas, Pennsylvania, New York and Tennessee have significantly increased their electricity rates.

North Dakota saw a slight decrease in electricity tariffs during this period.

All of this has made BTC production costly in most US states, with an average production cost of around $15,000.

Hosting contracts have risen in price

Due to the growth in cost, hosting contracts have become more expensive, on average 0.08-0.09 USD/kWh. This is a significant increase considering that previously hosting contracts typically offered electricity prices between $0.05 and $0.06 per kWh.

Many hosting providers are also opting for profit/revenue sharing models instead of the previously popular all-inclusive model.

These reasons are causing miners to have a hard time, especially with rising debt and difficulty finding liquidity options.