Original Author: Gino Matos

Original Translation: Luffy, Foresight News

Marathon's third-quarter financial report reveals a clear policy shift. The company announced that it will now sell a portion of newly mined Bitcoin to support operational funding needs.

This shift occurred on September 30, when MARA held approximately 52,850 Bitcoins, with the electricity cost of its own mining operations at about $0.04 per kilowatt-hour. Due to the rising difficulty of the Bitcoin network, the energy cost for purchasing each Bitcoin in the third quarter was approximately $39,235.

The transaction fees from Bitcoin trading accounted for only 0.9% of mining revenue in the quarter, highlighting the sluggish growth in fees. Since the beginning of the year, Marathon has consumed significant funds: approximately $243 million for property and equipment purchases, $216 million prepaid to suppliers, and $36 million for wind power asset acquisitions, all covered by $1.6 billion in financing and its own funds.

Currently, actual capital expenditures and liquidity needs coexist with the sluggish economic benefits of hash power. The timing of this shift is crucial: the pressure on the entire mining industry is continuously accumulating, and miners may join the sell-off wave triggered by ETF redemptions.

Different mining companies are affected in various ways, but Marathon's clear shift from "purely holding coins" to "strategically liquidating" provides a template for the industry: how mining companies might respond when profit margins are squeezed and high capital commitments collide.

Margin Compression Turns Miners into Active Sellers

In November, industry profitability tightened. This week, hash prices fell to a multi-month low of about $43.1 per terahash, due to declining Bitcoin prices, persistently low transaction fees, and a continuously rising hash rate.

This is a typical margin compression pattern. Revenue per unit of hash power declines while the hash rate rises, and fixed costs such as electricity and debt repayment remain unchanged.

For mining companies that cannot access cheap electricity or external financing, the easiest option is to sell Bitcoin rather than hold it and wait for prices to rebound.

The key consideration is the balance between cash reserves and operational costs. When the appreciation rate of Bitcoin exceeds the opportunity cost of "selling Bitcoin to pay for capital expenditures or repay debt," holding coins becomes worthwhile.

However, when hash prices fall below "cash costs + capital needs," holding coins turns into a gamble—betting that prices will rebound before liquidity runs out. Marathon's policy shift indicates that, given the current profit margins, this gamble is no longer profitable.

The potential risk is that if more mining companies follow the same logic and liquidate Bitcoin to meet commitments, the supply flowing into exchanges will further increase market selling pressure.

Divergence in Mining Company Landscape

So, what about other Bitcoin mining companies?

Riot Platforms reported record third-quarter revenue of $180.2 million, with strong profitability, while launching a new 112-megawatt data center project. This is a capital-intensive project, but with flexible options on its balance sheet, the company can alleviate the pressure of passive Bitcoin sales.

CleanSpark's first-quarter disclosure showed that its marginal cost per Bitcoin is around $35,000. In October, the company sold approximately 590 Bitcoins, generating about $64.9 million in revenue, while increasing its holdings to about 13,033 Bitcoins, representing "active fund management" rather than a large-scale sell-off.

Hut 8 reported third-quarter revenue of about $83.5 million, with positive net profit, while noting that mining companies in the industry are facing complex mixed pressures.

This divergence reflects differences among mining companies in "electricity costs, financing channels, and capital allocation philosophies." Mining companies with electricity costs below $0.04 per kilowatt-hour and sufficient equity or debt financing capabilities can withstand the impact of margin compression without relying on Bitcoin sales.

In contrast, those paying market electricity prices or facing high capital expenditures in the short term face different decision considerations. The impact of transitioning to artificial intelligence on future selling pressure is twofold: on one hand, long-term computing contracts (such as IREN's five-year $9.7 billion contract with Microsoft, including a 20% prepayment, along with a $5.8 billion equipment contract with Dell) can create non-Bitcoin revenue streams, reducing reliance on selling coins; on the other hand, these contracts require significant short-term capital expenditures and operating funds, during which liquidating held coins remains a flexible funding adjustment method.

Data on Capital Flows Confirms Risks

CryptoQuant data shows that from mid-October to early November, there has been an increase in mining companies transferring to exchanges.

A widely cited statistic indicates that since October 9, approximately 51,000 Bitcoins have been transferred from mining company wallets to Binance. While this does not prove that mining companies are immediately selling, it increases short-term supply pressure, and in conjunction with ETF capital flows, its scale cannot be underestimated.

CoinShares' latest weekly report shows that cryptocurrency exchange-traded products (ETPs) experienced a net outflow of about $360 million, with Bitcoin products seeing a net outflow of approximately $946 million, while Solana-related products saw strong capital inflows.

At a Bitcoin price of $104,000, a net outflow of $946 million equates to over 9,000 Bitcoins, roughly equivalent to three days of mining output from post-halving miners. If listed mining companies increase their selling pressure in a given week, it will significantly exacerbate market selling pressure.

The direct impact is the combination of mining companies selling coins and ETF redemption pressure. ETF capital outflows reduce market demand, while mining companies transferring to exchanges increase market supply.

When both move in the same direction, the net effect is tightening liquidity, which may accelerate price declines; and falling prices will further compress mining company profit margins, triggering more sell-offs and creating a vicious cycle.

Breaking the Vicious Cycle

The structural limitation is that miners cannot sell Bitcoin they have not mined, and the daily issuance after halving also has an upper limit.

Based on the current network hash rate, the total daily output of mining companies is about 450 Bitcoins. Even if all mining companies were to liquidate 100% (which is unlikely), the absolute capital flow would still have an upper limit.

The core risk lies in "concentrated selling": if large coin-holding mining companies decide to reduce their Bitcoin inventory (rather than selling newly mined output), market supply pressure will significantly increase.

Marathon's 52,850 Bitcoins, CleanSpark's 13,033 Bitcoins, and the holdings of Riot, Hut 8, and other mining companies represent months of accumulated mining output. Theoretically, if liquidity needs or strategic shifts require it, these Bitcoins could all be sold on exchanges.

The second key factor is the "speed of recovery." If hash prices and transaction fee ratios rebound, the economic benefits for mining companies could improve rapidly.

Mining companies that survive the margin compression period will benefit, while those that sell Bitcoin at the profit margin trough will incur losses. This asymmetry encourages mining companies to avoid passive sell-offs, provided their balance sheets can withstand the capital consumption during the transition period.

The current key question is whether margin compression and high capital commitments will drive enough mining companies to actively sell Bitcoin, thereby significantly exacerbating the downward pressure from ETF redemptions; or whether capital-strong mining companies can endure the margin compression period without needing to sell Bitcoin to complete financing.

Marathon's clear policy shift is the strongest signal to date: even large-scale, well-funded mining companies are willing to strategically sell mined Bitcoin when economic benefits tighten.

If hash prices and transaction fee ratios remain low while electricity costs and capital expenditures remain high, more mining companies will follow suit—especially those unable to access cheap electricity or external financing.

The continued capital inflow from mining companies to exchanges, along with any acceleration in the sale of existing Bitcoins, represents "additional selling pressure" during the ETF capital outflow period. Conversely, if capital flows reverse and transaction fees rebound, market pressure will quickly ease.

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