Amidst significant price fluctuations, Bitcoin miners have managed to maintain stable holdings throughout February. Despite recent sales triggered by BTC price surges, miners’ reserves remained consistent at around 1.82 million BTC, according to data from CryptoQuant.
This stability is notable given the considerable outflows from mining pools to crypto exchanges, amounting to approximately $40 billion.
Halving spurs activity, but reserves remain unchanged
As Bitcoin’s price surged above $52,000 on February 26, miners sold at least 40,000 BTC, marking a significant move in response to market dynamics. However, despite this activity, miners’ wallet reserves on February 28 showed only a marginal difference from the beginning of the month, standing at 1.828 million BTC compared to 1.827 million BTC on February 1.
With the next Bitcoin halving anticipated around April 19, 2024, miners are preparing for the event by adjusting their strategies to maximize profitability. Historically, miners have sold more BTC before halving events to capitalize on higher prices before block rewards decrease. This deflationary mechanism, occurring roughly every four years, reduces the rate at which new BTC is generated, consequently impacting miners’ revenue.
Miners prepare for reduced block rewards
The impending halving will decrease block rewards from 6.25 BTC to 3.125 BTC, presenting challenges for miners who must contend with consistent or increasing mining costs. To mitigate potential revenue cuts, miners are revamping their operational strategies. CleanSpark, for instance, has announced plans for an in-house trading desk to manage and trade its Bitcoin holdings directly, aiming to reduce associated trading costs.
Analysis suggests that companies like CleanSpark, Riot, and TeraWulf are well-positioned to navigate the challenges posed by the upcoming halving. One of the key concerns for miners is the significant selling, general, and administrative expenses (SG&A) they incur. Failure to address these costs could result in operating losses and compel miners to liquidate their holdings.
Post-halving production costs predicted
The average cost of production for crypto miners will hover around $37,856. This estimation underscores miners’ importance in streamlining their operations and optimizing efficiency to remain profitable in the face of reduced block rewards.
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