The Citi analysis points to the increased sophistication and cost of mining as a major driver for growth in bitcoin supply.
As mining costs rise, miners come under pressure to sell their freshly unearthed bitcoin to recoup the costs of their investment in equipment. Citi notes that about 3,500 BTC are mined daily, against a backdrop of 60,00010,000 BTC in daily trading volume in recent months. The research note says:
If the miners are a steady source of supply and there is no increase in final demand, we have this overhang of bitcoin being sold in the market. In consequence, we have downward price pressures.
I'm interested in knowing more about this, specifically about the downward pressure caused by miners selling their bitcoin. What type of pressure could this be causing? Anything measurable?
The author of the article doesn't know what he is talking about.
The is an upward pressure on price because the production cost is below the price. So supply is limited, only merchant and trader are selling (and buying), miner can not recoup their capital cost at this price.
I don't think this would cause an upward pressure, but rather less of a downward pressure because the miner would not need to sell all of the bitcoin they produced to pay for their current (electricity) expenses.