Miner reserves have witnessed consistent net outflows since the debut of the Bitcoin ETF, plunging to their lowest level since June 2021.
- According to a market report by Bitfinex, Bitcoin miners have escalated BTC sales to secure capital for upgrading machinery and preparing for the impending halving event, which will slash rewards.
- VanEck noted that low-cost miners have offloaded fewer tokens, while companies with high operating costs have liquidated almost all of their mining rewards.
Although inflows into the new spot Bitcoin ETFs have grabbed headlines, Bitfinex analysts highlighted in a Monday report that it’s likely miner selling of Bitcoin (BTC) that has restrained prices recently.
Miner reserves – the Bitcoin holdings in miner treasuries – have witnessed net outflows since the launch of Bitcoin exchange-traded funds (ETF) in mid-January, according to CryptoQuant data, now plummeting to their lowest point since June 2021.
The Bitfinex report referenced Glassnode data revealing that miners transferred approximately $1 billion worth of BTC to crypto exchanges on January 12, the day following the ETF launch, potentially capitalizing on Bitcoin’s price surge to two-year highs.
“This decline in reserves indicates that miners are either divesting their Bitcoin holdings or using them to raise funds,” wrote Bitfinex analysts. “This capital seems primarily directed towards upgrading machinery and mining facilities.”
This increased selling activity coincides with the upcoming Bitcoin halving, a quadrennial event in which the reward to miners for securing the Bitcoin blockchain is halved, slated for April.
The halving is poised to significantly impact miners’ profitability, potentially driving smaller, less efficient operations out of business or compelling them to merge with larger entities to survive, explained the report.
“Selling [Bitcoin] now provides miners with capital to enhance infrastructure and underscores the substantial influence that miners wield over market liquidity and price discovery,” observed Bitfinex analysts.
The sustained selling pressure from miners may be contributing to the stalled momentum of Bitcoin in recent weeks. BTC saw a correction of up to 20% following the yearly high of $49,000 achieved on the ETF launch day. Although the price has since rebounded and stabilized above the $40,000 mark, it has faced resistance in numerous attempts to breach $44,000.
While overall outflows from miners have surged, Matthew Sigel, head of digital asset research at VanEck, pointed out that the extent of selling by individual miners hinges on their operational costs.
“Low-cost miners such as CleanSpark (CLSK), Riot (RIOT), and Cipher Mining (CIFR) are offloading fewer coins due to their lower cost basis,” he stated in an X post on Tuesday. “Conversely, higher-cost operators like Argo Blockchain (ARBK) and TeraWulf (WULF) are liquidating approximately 100% of their proceeds.”
(Note: X post refers to an unspecified source or platform mentioned in the original text.)