(Bloomberg) -- Lower network fees and reduced rewards for mining Bitcoin raises the risk of forced selling of the digital asset by companies that compete to validate the cryptocurrency’s transactions, according to a report from Kaiko Research.

Fees have decreased to an average price between $3 and $5, down from around $45 in January, Kaiko data show. In April, a code update referred to as the halving reduced the block rewards received for solving complex equations to process the transactions to 3.125 Bitcoin from 6.25 Bitcoin.

This has pressured miners by eroding revenue, making the process less profitable while expenses like energy, wages and rent remain practically the same. The decrease in network fees has also cut into revenue.

In the past, subsequent rallies in the price of Bitcoin following a halving have typically helped miners bridge the drop in rewards. The price of Bitcoin has increased after the prior three halvings. Bitcoin is little changed since the April 19 software change.   

Fees had spiked to almost $150 in April following the halving, when there was a surge in nonfungible tokens being minted on the Bitcoin blockchain. The increase served as a short-term respite for the miners before the fees returned closer to average levels.

One of the largest Bitcoin Miners, Marathon Digital, sold 390 Bitcoin in May and is planning to sell even more of its tokens to manage its finances. The risk of forced Bitcoin selling from miners may persist in coming months, according to Kaiko.

The research firm also says the revenue squeeze will result in mergers where miners seek to “consolidate assets” and “increase efficiency.” Consolidation is expected to persist as the impact of the halving is reverberates throughout the industry.

Kaiko cited the example of miner Riot Platforms Inc., which sought to buy rival Bitfarms Ltd. in a hostile takeover. Additionally, miner CleanSpark Inc. agreed last month to buy Griid infrastructure Inc. in an all-stock transaction for $155 million.

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