Bitcoin miners’ reserves remained stable in February, despite $40 billion flowing from mining pools to crypto exchanges, according to data from CryptoQuant. On February 28, miners’ wallets held 1.828 million BTC, a slight difference from February 1 when their reserves were at 1.827 million BTC. Although the holding levels remained the same, recent fluctuations in BTC price led to significant sales from miners. On February 26, at least 40,000 BTC were sold as the price surpassed $52,000.
Bitcoin’s price has increased by 22% in the past week, supported by inflows from ETFs and market anticipation of the next halving. Most of the miners’ sales ahead of the halving occurred in January, with total reserves ranging from 1.840 million BTC at the peak to 1.827 million BTC at the end of the month. Historically, miners sell more BTC reserves before the halving to maximize profits before the block reward decreases.
The halving, which occurs every four years, is part of Bitcoin’s deflationary mechanism. It reduces the rate at which new BTC is generated and the block reward received by miners for verifying transactions. The next halving is expected to take place around April 19, 2024, reducing block rewards from 6.25 BTC to 3.125 BTC. Mining costs may remain the same or increase as miners expand operations to remain profitable.
To prepare for the rewards slash, crypto miners are revising their strategies. CleanSpark, for example, announced plans for an in-house trading desk to manage and trade its Bitcoin holdings internally. This approach could reduce trading costs. CleanSpark, Riot, and TeraWulf are considered well-positioned to handle the revenue cut, according to CoinShares. The average cost of production post-halving for crypto miners is anticipated to be $37,856.