There is no calm in the world of Bitcoin. The massive $305 million sale of mining giant Cango and the sharp drop in network difficulty are shaking the financial balances in the industry. The ongoing pressure on profitability since the end of January has led to a historic 14% decline in difficulty, proving that inefficient devices are out of action. In an effort to strengthen their corporate balance sheets, public miners are engaged in a strategic fight for survival in the face of price fluctuations.
Capacity and Difficulty Adjustment in the Mining Industry
Bitcoin’s network difficulty decreased by a total of 14.1% in two successive reductions between January 22 and February 6, somewhat relieving the burden on miners. Analyst Axel Adler Jr. According to data shared by , these dramatic declines of 3.3% and 11.2% indicate that low-efficiency mining equipment is being unplugged due to weak price movements in the market. The price of Bitcoin, which lost 24% of its value last month and fell to the $ 60,000 limit, forced businesses that could not cover their production costs to reduce their capacity.
Amidst this turbulence in the market, publicly traded mining company Cango announced that it has disposed of 4,451 Bitcoins in order to increase its cash reserves. Although this move, worth approximately $305 million, did not cause panic on the corporate side, it caused an 8% loss in value in the company’s stocks. Analysts interpret the sale in question as a strategic balance sheet decision taken on a corporate basis, rather than a market-wide liquidation; As a matter of fact, miner flows to exchanges are still at reasonable levels.
Profitability Pressure and Puell Multiple Signals
Puell Multiple data, which compares the daily income of miners with the annual average, reveals the extent of stress in the sector in numbers. This metric, which was at 0.86 in mid-January, dropped to 0.77 in early February, confirming that miners’ earnings had fallen below the annual average. Seeing 0.61 levels in spot readings indicates a critical threshold that has often resulted in miner capitulations and device shutdowns in the past.
Market experts argue that in order for the mining ecosystem to get out of this stressful phase, the network difficulty must rise again and the Puell Multiple value must return to the 0.85 to 0.90 band. In the current situation, miners take a cautious stance, prioritizing liquidity over aggressive growth. The possibility of the Bitcoin price falling below $ 60,000 remains on the table as the biggest risk factor that could drag other major mining companies into similar sales moves.
