- June 20, 2024
- Posted by: [email protected]
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Bitcoin miner reserves have dropped to 1.90 million BTC as of June 19, 2024, marking their lowest level since February 2010. This significant decline underscores a trend where miners are holding less Bitcoin on their balance sheets. Despite the reduction in reserves, the fiat value of these holdings remains near an all-time high, at approximately $135 billion.
According to data from IntoTheBlock, miner reserves have declined from 1.95 million BTC at the start of the year to 1.90 million BTC by mid-June. This reduction is partly due to the Bitcoin halving event on April 20, 2024, which slashed mining rewards from 6.25 BTC to 3.125 BTC. Lucas Outumuro, head of research at IntoTheBlock, highlighted that halving events, which occur approximately every four years, significantly impact miners by reducing their Bitcoin rewards. However, Outumuro pointed out that the reduction in reserves has historically been gradual, thereby minimizing major selling pressure on the market.
Sascha Grumbach, CEO of Green Mining DAO, noted that today’s miners have adapted to these changes, learning from past market cycles. “Today’s miners have learned from past cycles. Gone are the days of overleveraging and holding onto too much Bitcoin, a strategy that backfired in the past,” said Grumbach. This adaptation has helped miners navigate the challenges posed by the halving and maintain financial stability.
Despite the decrease in Bitcoin reserves, the market capitalization of US-listed Bitcoin mining companies has surged. As of June 15, 2024, the market cap of these companies reached an all-time high of $22.8 billion. Core Scientific, TeraWulf, and IREN led this increase, with stock prices up 117%, 80%, and 70%, respectively. This increase in market cap reflects investor confidence in the resilience and future profitability of these companies despite reduced mining rewards.
According to Glassnode’s data, Bitcoin miner balances have steadily decreased in recent weeks and are now around 1.8 million BTC in total. This ongoing sell-off indicates a shift in miner strategy towards maintaining financial stability rather than the long-term accumulation of bitcoin. According to CryptoSlate’s lead analyst, James Van Stratten, Bitcoin miners are experiencing an extended sell-off period not seen since 2017. The market is currently 33 days into a miner capitulation, which historically lasts about 41 days. Miner capitulation occurs when miners are forced to shut down machines or sell BTC to remain operational, often due to unprofitable conditions.
The primary challenge to miner profits has been the April halving, which cut the block subsidy from 6.25 BTC to 3.125 BTC per block. Since April 19, the average daily revenue for miners has dropped from approximately 900 BTC to 450 BTC. Although network fees provide some revenue, they remain minimal compared to the block rewards. The competitive nature of mining has intensified, with only the most efficient operations maintaining profitability.
According to CryptoQuant, miners sold 1,200 BTC in over-the-counter deals last Wednesday, led notably by Marathon Digital, the largest publicly traded miner. This selling pressure contributed to Bitcoin’s price dropping by 2% to around $65,152 on June 18. Currently, Bitcoin is trading around $65,100, having hit an intraday low of $64,700. The price decline has turned the initial support level of $66,000 into a resistance level, indicating a bearish market trend.
As Bitcoin miners continue to adapt to the reduced rewards and increased competition, their strategies are shifting towards maintaining liquidity and financial stability. This shift, coupled with the ongoing sell-off, reflects broader market dynamics and the challenges faced by miners in the post-halving environment.
