Bitcoin miners are accumulating the asset at the current price range against a generally bullish backdrop and rising demand for the world’s largest cryptocurrency by market cap.
When miners HODL
Data from on-chain analytics platform Glassnode for the ‘Miner Net Position’ metric—which tracks miner addresses to show inflows/outflows—showed most miners were net holders of Bitcoin instead of selling the asset outright.
The metric was a reversal compared to the data from earlier this year. In January, miners were net sellers of the asset instead of holders as Bitcoin traded from $20,000 to over $40,000. The selling dropped off in February (Bitcoin rose to over $61,000 at the time) and has since remained relatively insignificant.
Miners are entities or individuals with massive amounts of computing power at their disposal. They maintain the Bitcoin network by validating blocks and approving transactions, receiving Bitcoin as a ‘reward’ in return.
The ‘mined’ Bitcoin is mostly sold to cover the massive costs that mining farms incur, such as labor, computing equipment, and cooling charges. The selling releases ‘new’ Bitcoin onto the market, and higher prices mean lesser BTC needs to be sold to cover costs.
The impact on Bitcoin
Miners not selling Bitcoin ideally means they have enough funds to maintain their rigs at current prices in the current times. It also means that as ‘new’ Bitcoin isn’t getting released in the open market, the supply is constrained whereas the demand remains the same—a ripe condition for higher prices.
But there could be other financial incentives for the miners too. MicroStrategy CEO Micheal Saylor, who has become somewhat of a Bitcoin savant in recent times, tweeted in this regard:
“Maxi Bitcoin Mining Strategy = (1) Keep all the BTC you mine (2) Issue Equity/Debt to purchase capital equipment & pay operating expenses (3) Issue additional Equity/Debt to acquire more BTC if/when accretive.”
Meanwhile, as miners continue to hoard Bitcoin, other on-chain indicators suggest the current bull run could just be starting. Investors are likely so euphoric then.
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Source: On-chain data shows Bitcoin miners are HODLers and accumulating