Miners Reduce their Bitcoin Sales Before the Halving. Will this Impact the Market?

19 Apr 2024

Despite the 50% reduction in bitcoin (BTC) supply issuance that will occur with the halving, the network's miners have not resorted to mass selling their holdings.

This is evidenced by an investigation by Bitwise, with data from the five main mining companies: Marathon Digital, Bitfarms, Riot Platforms, CleanSpark and Cipher Mining. According to the report, BTC sales by these companies slowed to a two-year low in the first quarter of 2024.

Statistics indicate that after having sold more than 7,000 BTC in the last quarter of 2023, the main mining companies sold only 2,000 BTC in this first quarter of 2024 ( a drop of more than 70% ). The last time these mining companies sold less than 2,000 BTC was in the first quarter of 2022.

The Bitwise report is published days before the halving, the mechanism that will halve the rewards for issuing Bitcoin blocks, which is expected to occur this April 20. The information coincides, in part, with what CryptoQuant data indicates.

According to the calculations of this other analysis firm, based on the total shipments to the exchanges of the network's miners, sales decreased in the month of February, after a massive increase experienced at the beginning of 2024. Although some increases are observed in the month of March and so far in April, possibly related to the expectations generated by the halving of rewards.

With the halving, the miners' rewards will go from 6.25 BTC to 3.125 BTC, taking the issuance from 900 to 450 BTC. A decrease in supply that reduces mining income and that, historically, usually affects the profitability of companies

On this topic, Bitwise notes that Bitcoin mining income fell by 40% in the month after the 2020 halving. The drop was 51% after the 2016 halving. "The data is limited, but it reveals a pattern", says Bitwise.

In such a situation, the action of the miners generally points to the sale of BTC, as a way to face the increase in costs. The idea is to be prepared to continue competing for the reward provided by the Bitcoin network.

However, for this fourth halving, mining companies seem to be more prepared than on other occasions, since miners' income registered an increase of 30% in the last quarter.
The increase in income, in the 5 companies that Bitwise evaluates, is estimated at over USD 4.5 billion . Marathon Digital stands out as the company that mined the largest amount of bitcoins, with more than 2,500 BTC. Bitwise figures also indicate that miners around the world currently hold more than 700,000 BTC, representing 3.4% of the total bitcoin supply.

The higher level of income of the miners is added to other market factors, which have generated an imbalance between the supply and demand of BTC . A fact that favors mining companies. This is the arrival of bitcoin ETFs on the stock markets.

The new financial products have generated a high demand for bitcoin in 2024, influencing the increase in the price of the digital currency. With this increase, BTC managed to reach a new all-time high before the halving, a circumstance not seen in previous cycles and which aroused great enthusiasm among market players.

However, Bitwise analysts consider that, so far, "the market has valued the short-term impact of the halving, but underestimates the long-term impact." They thus remember that the evolution of the price of BTC in the month after the reduction of rewards has been “historically disappointing”.

Faced with such a possibility, executives of mining companies, such as Marathon Digital, have assumed the new all-time high for bitcoin as a preview of what would have been a rebound after the reduction. It is then presumed that the BTC sales made by miners have already taken into account the probable drop in the price in the post-halving period.

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