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Bitcoin Miners Returned to Hodl

According to data from on-chain analytics firm Glassnode, crypto miners are increasing their bitcoin holdings in the new year.

Bitcoin Miners Have Returned to ‘Hodl,’ but for How Long? iBase Trading.
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According to data from on-chain analytics firm Glassnode, Bitcoin miners are increasing their bitcoin holdings in the new year. Some miners may be compelled to sell their mined bitcoins due to the recent dramatic drop in bitcoin pricing.

Since Jan. 6, the “miner net position change,” has witnessed a big positive movement. It measures the 30-day shift in the net buying and selling activity in the miners’ addresses. It has lasted far into the second week of January. Though the price of BTC has dropped to over $40,000.

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According to Glassnode’s data, the amount retained in miner wallets has climbed by roughly 6,474 bitcoins to about 1.826 million as of Tuesday. This compared to 1.82 million on December 31. Other sources of BTC inflow, rather than merely creating coins every day, maybe included in miners’ wallets.

“We believe that miners are being careful with their finances by holding on to their bitcoin awards until prices rise,” said Danni Zheng, investment director at BIT Mining. “We hope other bitcoin miners will follow our lead and hold off selling their bitcoin shares at the highest potential price.”

Another indicator of the miners’ similar holding patterns has also hit a new high. The total number of coins given to miners for solving a block but never moved on-chain. It reached a new high of 1.779 million on Tuesday, according to Glassnode data.

“As the price of bitcoin falls, miner unspent supply rises, and miner net position change improves.” This is according to Marcus Sotiriou remarked, an analyst at GlobalBlock. He is also a U.K.-based digital asset trader. This means that bitcoin is getting rarer as miners choose to keep their mined coins instead of selling them, according to Sotiriou.

Bitcoin Proxies

Holding onto the mined digital money on their balance sheet paid well for miners in 2021. It is when BTC surged to all-time highs and the total network hashrate was relatively low. The high leverage to bitcoin allowed publicly traded miners’ shares to ride the boom in BTC prices. Moreover, this enabled miners of all sizes access to the capital markets.

“Miners were rewarded for a strong allocation to bitcoin in their treasury management in 2021, thanks to the hodl approach,” said Ethan Vera, chief operating officer of Seattle-based mining business Luxor. And the pattern is expected to continue this year, as many miners are still used as a middleman for bitcoin in public markets. In addition, while a spot BTC exchange-traded fund awaits regulatory approval in the United States.

Miners didn’t have to sell bitcoin to sustain operational costs. They had adequate cash and investors pouring money in, according to Compass Mining CEO Whit Gibbs. “And because miners are quite bullish on bitcoin, this allows them to do what they naturally want to do, which is speculate on bitcoin’s good price appreciation,” he continued.

Miner Strategies

Not all miners have the same strategy as some saved all of their produced bitcoins. On the other hand, others utilized some to reinvest in their operations. CleanSpark, a BTC miner, announced on Jan. 6 announced that it has sold 414 bitcoins for an average price of $49,791 in December. This is used to fund its expansion and operations.

Some miners have found it difficult to hold onto their produced bitcoins due to the price fall in November. Competition is expected to increase as the network’s hashrate rises this year. Some miners may find it difficult to keep their bitcoins.

“Miners are hanging onto mined BTC in the hope of a price recovery,” said Juri Bulovic, Foundry’s head of mining. “Due to the slow start of the year,” he noted, “some will now have to sell more mined BTC than previously to foot their monthly costs.”

Reinvesting into the company may help the miners in the long run by allowing them to fund their expansion without having to issue additional shares or take out loans. “The disadvantage of 100% hodling is that operating costs must be paid through debt or dilution,” stated Matthew Schultz, CleanSpark’s executive chairman.

He said, “We continue to see the advantages in using BTC to support operating expenditures and expansion. Also as a preferable store of wealth over USD.”

“The views and opinions on this Crypto News Website are solely those of the authors and contributors. These views and opinions do not necessarily represent those of iBaseTrading or its partners.”

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Angela Lopez stepped into the Cryptocurrency world after her Journalism career and hasn't looked back since, writing about anything crypto-related. She started working with iBasetrading in October 2011.