Mark Weaden
Bitcoin miners are actively diminishing their coin reserves, likely in anticipation of the forthcoming halving scheduled for April 20, aimed at ensuring operational sustainability. The quantity of Bitcoin held by miners, acquired through transaction validation in the blockchain, has dwindled to 1.794 million BTC this week, marking the lowest since early 2021, according to data from CoinMetrics.
This decline, amounting to 27,000 BTC since November, indicates a consistent selling trend in the months leading to the quadrennial reward halving, which will reduce per-block BTC emission from 6.25 BTC to 3.125 BTC. This depletion contrasts the steady accumulation of approximately 25,000 BTC in the five months before the previous halving in May 2020.
This shift in strategy is attributed to Bitcoin's recent surge to record highs above $73,000, a 63% increase this year, surpassing the previous cycle's peak of around $69,000 well ahead of the halving. Traditionally, new highs are observed months post-halving.
The rally has empowered miners to capitalize on higher prices, funding equipment upgrades in preparation for reduced rewards, as observed by algorithmic trading firm Wintermute. Wintermute, in a weekly newsletter, stated, "With miners' holdings still near an all-time high in USD terms ($124 billion), this sell-off appears to be a strategic move for profit-taking and operational upgrades, marking a behavioral change from the last cycle."
This strategic maneuver is further evidenced by the rise in hashrate, exceeding 600 exahashes per second over five months, a 45% increase, surpassing the 15% growth observed before the previous halving. Wintermute further noted, "The consistent rise in hashrate suggests that some of the miners are either adding or upgrading their equipment to mitigate the impact of the upcoming halving on revenues. This early investment reflects a positive future outlook and a strategic shift toward long-term operational resilience."
