With the fall in bitcoin prices, public bitcoin mining companies have found themselves stuck between two rock walls. Their cash flow was declining significantly so they decided to sell bitcoin to cover operating costs. These public miners accumulated a huge amount of BTC during the amazing year 2021. Now, it is making its way onto the market. They are running out of coins.
Bitcoin Miners Do Not Use Coins
In the three-months since March, reports have surfaced that Bitcoin miners were selling thousands of BTC. Because they sold more BTC than miners produced in one month, the alarming volume was alarming.
CryptoQuant, a blockchain data aggregation platform, announced on September 2nd that Bitcoin miners had sold approximately 4,586 BTC within three days. At the time, bitcoin’s price was trending just above $20,000, bringing the dollar value of the sale to more than $93 million at the time.
The collective 5,700 BTC sold by public bitcoin miners in the month July was a record. As miners began to ask more questions, the trend continued into August. The miners had already dumped over 6000 BTC in the last week of August.
The public bitcoin miners managed to stay out of bankruptcy by selling their BTC. Their BTC stash isn’t infinite and they run out of coins.
Miners’ Balances Run Low
The public bitcoin miners have sold an impressive portion of their balance sheet at this point. Despite the good state of the market and the sales, miners now face another challenge: they don’t have enough bitcoin to sell.
Their balances are suffering because they’ve been buying more BTC than what they produce. Marathon Digital, Hut 8 and Hut 8 are the two companies that have had to suffer most. Both of these miners were in huge balances as of the 31 March, just before they began selling BTC. Marathon Digital, Stronghold, and Hut 8 have sold more than 60% of their BTC assets in the past three months. Hut 8 has already sold approximately 40% of its holdings while Core Scientific has only sold 33%.
Source: Arcane Research| Source: Arcane Research
This trend has not been followed by all miners. Some miners use this time to expand their holdings. Riot Blockchain, a bitcoin mining company that is public, has almost doubled its Bitcoin holdings in just three months. Cleanspark recorded a 15% rise in BTC balances.
These miners have to continue selling large quantities of BTC. However, most are still doing well in financial terms. Stronghold is the only miner on the list experiencing serious financial problems. Its lack of large BTC reserves was the reason.
Featured Image from Vecteezy. Charts from Arcane Research and TradingView.com.
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