Mining company's "liquidity"? Marathon sells some newly mined Bitcoin, ETF redemption pressure may intensify supply shocks

Marathon Digital Holdings (MARA) quietly announced a clear policy shift in its Q3 earnings report: the company will now sell a portion of the newly mined Bitcoin (BTC) to fund its operations. This move comes amid industry challenges such as declining hash prices, low transaction fees, and high capital expenditures. MARA’s average electricity cost is approximately $0.04 per kWh, with a third-quarter electricity cost of about $39,235 per Bitcoin. As more mining companies may follow this “operation over accumulation” strategy, combined with inflow data from mainstream CEX exchanges, the dual pressures of miner selling and ETF redemptions could pose a substantial threat to market liquidity.

Miner Profit Squeeze: Marathon Begins Selling Cycle

As of September 30, Marathon held approximately 52,850 Bitcoins, with profitability under multiple pressures forcing a shift away from its previous pure accumulation (pure accumulation) strategy.

• Profit Contraction: In November, with Bitcoin prices falling, transaction fees low, and hashrate rising, hash price dropped to multi-month lows of around $43.1 per PH/sec, creating a typical margin squeeze (margin squeeze).
• Rigid Costs: Despite relatively low electricity costs, heavy capital expenditures on real estate, equipment, and wind assets remain burdensome.
• Policy Signal: Marathon explicitly stated it will sell some of its mined Bitcoin, indicating that at current profit margins, holding strategies are less cost-effective than selling to meet operational and debt servicing needs.

Many smaller miners lacking cheap electricity or external financing options face fixed cost pressures, making selling mined coins rather than holding in hopes of a price rebound the most straightforward survival strategy.

Selling Risks Amplified: Miner Flows and ETF Outflows Resonance

This “liquidity realization” behavior among miners resonates with current ETF redemption pressures.

• On-Chain Flows: CryptoQuant data shows that since October 9, about 51,000 BTC have moved from miner wallets to mainstream CEXs, increasing potential supply in the short term.
• ETF Outflows: CoinShares’ weekly report indicates approximately $360 million net outflow from crypto ETPs, with Bitcoin products experiencing net outflows of about 9,460 BTC (at $104,000 per BTC), roughly equivalent to the three-day average daily issuance of miners.

When ETF redemptions (removing primary market demand) and miner selling (adding secondary market supply) occur simultaneously, the net effect is liquidity tightening, potentially accelerating price declines and further squeezing miner profits, creating a vicious cycle.

Miner Landscape Divergence: Who Can Survive the Squeeze?

Market participants are increasingly differentiated based on electricity costs, financing channels, and capital allocation philosophies:

• Advantageous Players: Riot Platforms reported a record quarterly revenue of $180.2 million and launched large-scale data center expansions, demonstrating capacity to balance their balance sheets amid capital-intensive growth. CleanSpark reported marginal costs close to $35,000 per Bitcoin and actively managed inventories in October, generating approximately $64.9 million in sales while increasing reserves.
• Disadvantaged Players: Operators paying market electricity rates or burdened with heavy short-term capital expenditures face tougher choices.

The expansion of AI operations has a dual impact: on one hand, long-term hash rate contracts (such as IREN’s deal with Microsoft) can generate non-Bitcoin revenue streams, reducing reliance on coin sales; on the other hand, these contracts often require significant short-term capital outlays, making liquidating existing reserves during the transition a flexible option.

Breaking the Feedback Loop Constraints

The structural constraint of miner supply lies in their daily production limit. With current hash power, daily supply is about 450 BTC. Even if all miners sold 100% of their daily output, the absolute amount entering the market remains limited.

The real risk is concentration: if large holders choose to deploy their treasury reserves (Treasury) rather than just selling daily output, market pressure could surge dramatically. Marathon’s holdings of 52,850 BTC represent a significant potential sell pressure that could be released if market conditions permit.

Conclusion

Marathon’s explicit policy shift marks a move into a more pragmatic, cash-flow-oriented phase for the Bitcoin mining industry. In an environment of depressed hash prices and unstable fee income, miners’ financial resilience is being tested like never before. If more small and medium miners follow this trend, the market could face increased short-term selling pressure amid ETF redemptions. The future trajectory will depend on whether Bitcoin prices can rebound to improve mining economics and whether better-capitalized miners can leverage existing reserves and diversified revenue streams to weather this profit squeeze.