Bitcoin miners are benefiting from an expected reduction in revenue due to the so-called halving, when blockchain network protocols reduce rewards for validating transactions by half.
According to data compiled by CryptoQuant, miner reserves (unsold Bitcoins stored in digital wallets associated with companies) decreased by 8,400 tokens since the beginning of 2024 to 1.8 million tokens, ending June 2021. It finally reached this level. Analysts said the decline indicates miners are selling tokens.
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“Ahead of a tougher period for margins with block rewards halved in April, miners are starting to sell more coins to shore up their balance sheets and fund growth capital expenditures,” Van Eck said. said Matthew Siegel, head of digital asset research. “After the halving, scale becomes even more important.”
The quadrennial halving will reduce the amount of bitcoin miners receive to solve complex puzzles and operate the power-hungry computers that protect the network. The halving is key to limiting Bitcoin’s supply to 21 million tokens. In the upcoming event, the reward will decrease from 6.25 coins to 3.125 coins per block.
Miner sales appear to have weighed on Bitcoin prices since the approval of the first U.S. exchange-traded fund (ETF) to directly hold digital assets on January 10. During this period, the token fell by approximately 6% to $43,000.
According to CryptoQuant, a net 3,617 Bitcoins have moved from miner wallets to exchanges since the ETF's approval. There was a net outflow of 13,542 tokens on February 1st, the largest single-day outflow since December 2020.
“Miners appear to be selling their Bitcoin holdings to finance the purchase of more efficient mining rigs,” crypto exchange Bitfinex wrote in a recent note. “Reduced revenues will particularly impact small-scale mining operations, which could be forced out of business.”
Smaller mining companies with less access to capital markets may be using Bitcoin, but larger companies are using cash reserves and selling stock to raise funds.
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Marathon Digital Holdings, the largest mining company in the United States, has announced that it will sell Bitcoin from its historical reserves to cover operating costs. However, since cutting debt last year, the company has increased its cash and Bitcoin positions.
“Marathon has approximately $1 billion in cash and Bitcoin on its balance sheet,” said Charlie Schumacher, the company's vice president of corporate communications. “This war chest, containing 15,741 Bitcoin, provides us with the flexibility to fare well in the event of a repeat of Bitcoin’s historic price cycle, or to take advantage of consolidation opportunities if there is pressure on the industry. We will provide it to you.”
Bitcoin rallied 157% last year, betting on increased demand from U.S. spot ETFs and the conventional view that a halving would support token prices. However, the biggest digital asset rally ended in 2024.
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