Miner Selling Continues, But Could Be Set To Slow

Miners' BTC reserves are now at a relatively low point, following selling ahead of the Halving.

Miner Selling Continues, But Could Be Set To Slow

Bitcoin miners have been offloading coins in recent weeks, in preparation for the Halving. Due to take place in less than two months, this four-yearly event will see mining revenues slashed to just 3.125 BTC per block, or 450 BTC per day. Many miners, especially those running older and less efficient equipment, will be unable to meet their electricity costs at the current price of bitcoin. The large sells associated with mining addresses are likely due to these key players seeking to bank cash at a time of historically high bitcoin prices and hedge their exposure.

Falling Balances

Miners' balances have now fallen to a total of 1.8 million BTC, just short of 9% of supply. This is similar to the amount held on exchanges, and is a historically low level of bitcoin reserves for miners to hold.

The last time miners' balances were this low was two-and-a-half years ago. Miners put in a major local low at the beginning of 2021, offloading around 50,000 BTC as the cycle put in its first peak.

Miners are one of the key determinants of price, since they are the ones who decide whether new supply will be held or put onto the market to pay for electricity and hardware upgrades. There are many factors that feed into that decision, including total network hashrate, mining profitability, electricity costs, and the time before the halving.

Hashrate And Halvings: What’s In Store?
Bitcoin’s network typically adapts rapidly to the cut in mining revenues.

Past experience suggests that a number of miners will be forced offline by May, but that the resulting drop in hashrate will quickly be filled by new and more efficient rigs.

Selling To Ease?

Although miners now hold relatively low levels of BTC in historic terms, they still have large reserves left to sell if they need to. The community anticipates that prices will rise after the halving, but there are no guarantees of this. As block rewards decrease in size, so too does the effect of the halving decrease, since Bitcoin's "inflation" rate is already low.

On the other hand, with new inflows from the ETFs and a narrative of Bitcoin being the hardest money in existence, every little helps.

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