July 24, 2024
Bitcoin News

Bitcoin Miner Reserves Hit 14-Year Low

The amount of Bitcoin held by miners has dropped to its lowest total in over 14 years, according to data from IntoTheBlock. On June 19, miner reserves fell to 1.90 million Bitcoin, down from 1.95 million BTC at the beginning of the year. This marks the smallest amount of Bitcoin held by miners since February 2010.

Miners hold the smallest amount of Bitcoin since February 2010. Source: IntoTheBlock

Impact of Bitcoin Halving on Miner Reserves

Miners are expected to hold less Bitcoin over time due to the Bitcoin halving process. This pressures their margins and makes them more likely to sell their reserves. The Bitcoin network operates on a proof-of-work consensus mechanism where miners are rewarded with new Bitcoin for validating transactions and securing the network. Miners’ unsold Bitcoin is referred to as their “miner reserves.”

Every four years, the network’s mining subsidy is halved. The most recent halving occurred on April 20, 2024, reducing mining rewards from 6.25 BTC to 3.125 BTC. Despite this reduction, the dollar value of miner reserves has remained high, hovering around an all-time high of $135 billion. This indicates that while miners are holding less Bitcoin, the value of their holdings in USD has increased.

Miners’ reserves in U.S. dollar value remain near record highs. Source: IntoTheBlock

Miners Adapt to Market Conditions

Today’s miners seem to have learned from past cycles. According to Sascha Grumbach, CEO of tokenized mining firm Green Mining DAO, miners are now avoiding the overleveraging and excessive holding of Bitcoin that caused issues in the past. This shift in strategy reflects a focus on short-term financial stability rather than long-term accumulation of Bitcoin.

A recent report by CoinShares predicts that Bitcoin’s hashrate will surge in 2025 after a post-halving dip. However, decreasing rewards and increasing competition are causing the amount of Bitcoin produced per unit of hash power to decline over time. Thus, raising production costs for miners. As a result, having less Bitcoin is becoming the norm in the current market phase.

Image by freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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