Public Bitcoin miners sold off nearly everything they mined in 2022 but appear to have started accumulating reserves once again in what some hope is a bullish signal.
Publicly listed Bitcoin (BTC) miners sold off almost 100% of all the Bitcoin they mined throughout 2022, leading to a debate over whether the sales created “a persistent headwind” for the Bitcoin price or not.
Analyst Tom Dunleavy from blockchain research firm Messari shared the data in a Dec. 26 tweet which indicated that approximately 40,300 of the 40,700 BTC mined by Core Scientific, Riot, Bitfarms, Cleans Park, Marathon, Hut8, HIVE, Iris Energy, Argo and Bit Digital from Jan. 1 to Nov. 30 was sold off.
BTC miners sell roughly 100% of the coins they mine
The 10 public bitcoin miners
detailed here mined ~40.7k BTC and sold ~40.3k in 2022
This is a persistent headwind for BTC and for no other reason a good thesis to be bullish the ETHBTC ratio trade pic.twitter.com/L1iI6Z07p7
— Tom Dunleavy (@dunleavy89) December 26, 2022
The reserves held by mining firms have decreased considerably during the latter half of 2022, particularly throughout November as the crypto industry reeled from the effects of the FTX fallout.
Miner reserves vs Bitcoin price from Jul. 1 to Dec. 28. Source: CryptoQuant.
Dunleavy believes that miners consistently selling off newly produced Bitcoin places downward pressure on the price of the leading cryptocurrency.
However, some industry commentators such as BitMEX’s former CEO, Arthur Hayes, believe the selling pressure created by the increased sales of Bitcoin miners is negligible.
He opined in a Dec. 9 blog post that “even if miners sold all the Bitcoin they produced each day, it would barely impact the markets at all.”
Data from Bitcoin Visuals suggests that on Dec. 26 the daily trading volume for Bitcoin was $12.2 billion, while the outflow from miners on the same day according to CryptoQuant was 919 BTC ($15.35 million), which represents just 0.13% of the total volume traded.
Miner’s reserves have rebounded slightly during December, increasing by nearly 1%. The figure contributes to the view shared in a Dec. 27 post by crypto analyst IT Tech that the situation for miners appears to be stabilizing.
#Bitcoin miners – update. Is there anything to worry about?
White line on the bottom – miner to Exchange flow
2. Mining difficulty
3. Miner selling power
4. Hashrate 7D MA
— IT Tech (@IT_Tech_PL) December 27, 2022
Miners have faced significant headwinds throughout the year — with high electricity prices, falling crypto market prices and a higher mining difficulty eating into their bottom line.
With the cost of production for miners increasing while the Bitcoin price has been decreasing, miners such as Core Scientific have been forced to sell some of their reserves at a loss to fund their ongoing operations and efforts to expand.