Original author: Gino Matos

Original translation by Luffy, Foresight News

Marathon's third-quarter earnings report revealed a clear policy shift. The company announced that it will sell some of its newly mined Bitcoin to support its operating capital needs .

This shift occurred on September 30, when MARA held approximately 52,850 Bitcoins. The electricity cost of its own mining farm was approximately $0.04 per kilowatt-hour, and the energy cost per Bitcoin in the third quarter was approximately $39,235 due to the increased difficulty of the Bitcoin network.

Bitcoin transaction fees accounted for only 0.9% of mining revenue this quarter, highlighting the sluggish growth in fees. Marathon has seen significant cash burn this year: approximately $243 million for property and equipment purchases, $216 million in prepayments 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 sluggish hash rate economics. The timing of this shift is crucial: pressure is mounting across the entire mining industry, and miners may join the sell-off triggered by ETF redemptions.

Different mining companies are affected in different ways, but Marathon's clear shift from "purely hoarding coins" to "strategic monetization" provides a template for the industry: how mining companies may respond when profit margin squeezes meet high capital commitments.

With profit margins squeezed, mining companies are transforming into proactive sellers.

In November, industry profitability tightened. This week, hash rates fell to a multi-month low of approximately $43.1 per quadrillion hashes, due to factors including declining Bitcoin prices, persistently low transaction fees, and a continued rise in hash rates.

This is a typical profit margin compression model. Revenue per unit of hash power decreases, while the hash rate increases, while fixed costs such as electricity and debt repayment remain unchanged.

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

The key trade-off lies in the balance between capital reserves and operating costs. Holding Bitcoin is only worthwhile when its appreciation rate exceeds the opportunity cost of selling Bitcoin to pay for capital expenditures or repay debts.

When the price of hash falls below "cash cost + capital requirements," hoarding becomes a high-stakes gamble—betting that the price will recover before liquidity runs out. Marathon's policy shift indicates that, given current profit margins, this gamble is no longer profitable.

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

Differentiation in the mining industry landscape

So, what about other Bitcoin mining companies?

Riot Platforms reported record revenue of $180.2 million in the third quarter, demonstrating strong profitability, while also launching a new 112-megawatt data center project. This is a capital-intensive project, but the company's flexible balance sheet options allow it to mitigate the pressure of passively selling Bitcoin.

CleanSpark disclosed in its first-quarter report that its marginal cost per Bitcoin was approximately $35,000. In October, the company sold approximately 590 Bitcoins, generating about $64.9 million in revenue, while increasing its holdings to approximately 13,033 Bitcoins. This was described as "active money management," rather than a large-scale sell-off.

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

This divergence reflects the differences among mining companies in terms of "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 are able to withstand the impact of compressed profit margins without relying on selling Bitcoin.

Mining companies that pay market electricity prices or face high short-term capital expenditures face different decision-making considerations. The impact of transitioning to artificial intelligence on future selling pressure is two-sided: on the one hand, long-term computing contracts (such as IREN's 5-year, $9.7 billion contract with Microsoft, including a 20% upfront payment, and its $5.8 billion equipment contract with Dell) can create non-Bitcoin revenue streams, reducing reliance on selling coins; but on the other hand, these contracts require huge short-term capital expenditures and working capital, and during this period, cashing out and holding coins remains a flexible means of financial adjustment.

Fund flow data confirms the risks

CryptoQuant data shows that mining companies increased their fund transfers to exchanges from mid-October to early November.

A widely cited statistic shows that approximately 51,000 bitcoins have been transferred from mining companies' wallets to Binance since October 9th. While this doesn't prove that mining companies immediately sold off their holdings, it has increased short-term supply pressure, and considering the fund flows in ETFs, the scale is not to be underestimated.

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

Based on a Bitcoin price of $104,000, the net outflow of $946 million is equivalent to over 9,000 Bitcoins, roughly equivalent to three days' worth of mining output for mining companies after the halving. If listed mining companies increase their selling pressure in a particular week, it will significantly exacerbate market selling pressure.

The direct impact is the combined effect of mining companies selling tokens and ETF redemption pressures. ETF outflows reduce market demand, while mining companies transferring funds to exchanges increases market supply.

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

The key to breaking the vicious cycle

The structural limitation is that miners cannot sell the Bitcoins they haven't mined, and there is also a cap on the daily issuance after the halving.

Based on the current network hashrate, mining companies can produce approximately 450 bitcoins per day. Even if all mining companies were to cash out 100% (which is unlikely in reality), there is still an upper limit to their absolute cash flow.

The core risk lies in "concentrated selling": if large mining companies that hoard Bitcoin decide to reduce their Bitcoin holdings (instead of selling new production), market supply pressure will increase significantly.

Marathon's 52,850 bitcoins, CleanSpark's 13,033 bitcoins, and the bitcoin hoarding scale of mining companies such as Riot and Hut 8 represent the accumulated mining output over several months. Theoretically, these bitcoins could be sold on exchanges if liquidity needs or strategic transformations require them.

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

Mining companies that weather the period of shrinking profit margins will benefit, while those that sell Bitcoin during periods of low profit margins will suffer losses. This asymmetry prompts mining companies to avoid forced selling, provided their balance sheets can withstand the cash drain during the transition period.

The key question now is whether the compression of profit margins and high capital commitments will drive enough mining companies to actively sell Bitcoin, thereby significantly exacerbating the downward pressure from ETF redemptions; or whether mining companies with stronger capital will be able to weather the period of compressed profit margins and complete financing without selling Bitcoin.

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

If hash rates and transaction fees remain low, while electricity costs and capital expenditures remain high, more mining companies will follow suit—especially those that cannot obtain cheap electricity or external financing.

The continued inflow of funds from mining companies to exchanges, and any accelerated selling of existing Bitcoin holdings, constitute "additional selling pressure" during periods of ETF outflows. Conversely, if fund flows reverse and transaction fees rebound, market pressure will quickly ease.