Bitcoin outlook clouded by falling miner reserves ahead of April’s halving

Feb 7, 2024

Bitcoin miners are getting a jump on the anticipated decline Income from the so-called coincidence In aprilThe blockchain's network protocol will halve the reward when it verifies a transaction.
miner stock – Unsold bitcoins held in digital wallets linked to companies – according to data compiled by CryptoQuant – have fallen by 8,400 tokens to 1.8 million since the start of 2024, a level last seen in June 2021. Analysts said the decrease indicates that miners are selling tokens.
“Miners have begun selling more of their coins to strengthen balance sheets and fund growth capital expenditures ahead of tough times for margins,” said Matthew Siegel, head of digital-asset research at VanEck. “After the halving, the scale will matter even more.”
The quadrennial halving cuts the amount of Bitcoin that miners receive for running the power-hungry computers that secure the network by solving complex puzzles. The halving is important to limit the supply of Bitcoin to 21 million tokens. The reward per block will be reduced from 6.25 coins to 3.125 coins in the upcoming event.
Miner sales appear to be having an impact on the price of Bitcoin, which has been struggling since the approval of the first US exchange-traded fund to directly hold the digital asset on January 10. The token has fallen nearly 6% to $43,000 in that period.
According to CryptoQuant, since ETF approval, a net 3,617 Bitcoins have moved from miner wallets to exchanges. On February 1, there was a net outflow of 13,542 tokens, the largest single-day outflow since December 2020.
“Miners are selling their holdings of Bitcoin to finance the purchase of more efficient mining rigs,” crypto exchange Bitfinex wrote in a recent note. “Reduced revenues could particularly impact smaller mining operations, potentially driving them out of business.”
While smaller mining companies with less access to capital markets are tapping their Bitcoin funds, larger companies are using cash reserves and raising funds by selling shares.
Marathon Digital Holdings Inc., the largest US miner, said it would sell bitcoin from reserves in the past to cover operating expenses. But since curbing debt last year, the company has been increasing its cash and bitcoin positions.
“Marathon has approximately $1 billion in cash and bitcoin on its balance sheet,” said Charlie Schumacher, vice president of corporate communications. “That war chest, which contains 15,741 Bitcoins, allows us to perform well if Bitcoin's historical price cycles repeat or take advantage of consolidation opportunities if the industry is under pressure.”
Bitcoin returned 157% last year, thanks to surging demand courtesy of US spot ETFs as well as a bet on the traditional view that the token's price halving is a prop. But the biggest digital asset rally of 2024 has stopped.

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