- Bitcoin miners have been running down inventory in a rising market, moving away from the accumulation strategy seen ahead of the previous halving in May 2020.
- The shift likely stems from miners selling into the rising market to upgrade equipment and ensure sustainability after the impending halving of rewards on April 20, according to Wintermute.
Bitcoin miners are likely using their existing Bitcoins to keep running their businesses, as the amount of Bitcoin they receive for each block they mine will be reduced by half starting from April 2020.
The reason for the shift in approach is Bitcoin’s current upward trend reaching new heights at over $73,000. This digital currency has experienced a remarkable increase of 63% so far in 2021, surpassing its previous peak during the last cycle of around $69,000, even before the halving event took place. Typically, new record-highs have been reached several months following the halving.
Miners have been able to cash in on higher prices at the rally and use the earnings to invest in new equipment upgrades before the upcoming reduction in rewards, as reported by Wintermute, a trading firm that uses algorithms.
In his weekly newsletter, Wintermute noted that miners’ Bitcoin holdings are currently worth around $124 billion, which is close to an all-time high in US dollars. He interprets the recent sell-off as a calculated move for realizing profits and making improvements to their operations. This represents a shift in behavior compared to the previous cycle.
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The enhancements are clear in the Bitcoin blockchain through the increase in hashrate, which represents the network’s overall mining and transaction-processing capability.
Over the past five months, the hashrate has experienced a substantial jump of approximately 45%, surpassing the 600 exahashes per second mark. This growth rate is significantly greater than the 15% rise observed before the last halving event.
“Wintermute observed that the continual increase in hashrate implies some miners are preparing for the upcoming halving by either acquiring or enhancing their equipment. This proactive move shows optimism about the future and a commitment to long-term mining sustainability.”
11:49 UTC: Corrects second para to say the balance has dropped to lowest since early 2021.
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2024-04-10 14:56