Bitcoin Miners reserve held by miners hit a 14-year low of 1.90 million BTC on June 19, 2024. This precipitous drop represents the lowest level since February 2010, illustrating a general trend of miners keeping fewer Bitcoin in their wallets. This decline in Bitcoin reserves will not detract from the fact that their fiat worth is still very high, at over $135 billion.
Decline in Bitcoin Miner Reserves
According to data, the amount will go from 1.95 million BTC at the beginning of the year to 1.90 million BTC by mid-June. The halving event on April 20, 2024, reduced mining payouts from 6.25 BTC to 3.125 BTC, which is why there has been a decline. About once every four years, a halving event drastically reduces the incentives miners receive for their Bitcoin operations.
Outumuro pointed out, though, that traditionally, the rate of reserve depletion has been moderate, which has reduced significant selling pressure on the market. He said, “This hasn’t been a major selling pressure” since, “historically, this has been at a relatively slow rate.”
Thanks to the rise in Bitcoin’s price, the decline in Bitcoin reserves has not diminished the high dollar value of those assets. Green Mining DAO CEO Sascha Grumbach emphasized miners’ adaptability to these shifts, saying, “Today’s miners have learned from past cycles.” The days of making poor financial decisions by relying too much on debt and hoarding Bitcoin are over.
Even though miners’ holdings of Bitcoin have decreased, market valuation for Bitcoin mining companies registered in the US has increased. On June 15, 2024, these companies’ market caps hit a new record high of $22.8 billion.
Stocks in Core Scientific surged 117%, TeraWulf 80%, and IREN 70%, in that order. The halving and market dynamics have had a broader effect, causing miner revenue and reserves to fall even while stock prices have risen. According to Glassnode’s investigation, Bitcoin miners’ reserves are currently at around 1.8 million BTC and have steadily declined over the past few weeks. The continued price decline suggests miners focus less on building Bitcoin for the future and more on preserving their financial stability.
Bitcoin Miners Face the Longest
James Van Stratten, principal analyst at CryptoSlate, examined on-chain data and found that Bitcoin miners are experiencing a prolonged sell-off not witnessed since 2017. As of June 17th, the Bitcoin market is 33 days into a miner surrender. Historically, these capitulations have lasted around 41 days.
Suppose Bitcoin miners must turn off their equipment or sell their BTC to keep operating. In that case, this is known as “whichever capitulation,” which signifies that the business circumstances are unprofitable. Block subsidies were reduced from 6.25 BTC to 3.125 BTC in April’s Bitcoin halving, which posed the greatest threat to miner profitability. The average daily earnings for miners has decreased from around 900 BTC to 450 BTC since April 19. Although network fees do generate some income, they are still relatively tiny.
Only the most productive mining companies can stay afloat in today’s cutthroat industry. Data from the blockchain shows that even the most prominent mining companies are selling their coins due to shrinking profit margins, contrary to hopes that these companies will survive the halving.
According to CryptoQuant, Marathon Digital, the biggest publicly traded miner, was the main initiator of the 1,200 BTC sold by miners in over-the-counter (OTC) exchanges last Wednesday.
Bitcoin’s price on June 18 was nearly $65,152, a 2% decline. Selling pressure on Bitcoin has intensified today as the cryptocurrency hits an intraday low of $64,700, amidst the lowest holdings of Bitcoin by hedge funds since October 2020. It continues to hover around $65,100. As a result of the fall in price, the short-moving average, which served as support at roughly $66,000, is now acting as resistance. Bitcoin trades at approximately $65,660 but has not overcome this new resistance level.