Bitcoin Miners’ Reserves Hit Lowest Level in 14 Years

According to data from IntoTheBlock, the amount of Bitcoin (BTC) held by miners has dropped to the lowest level in 14 years. On June 19th, miner reserves declined to 1.9 million BTC, down from 1.95 million BTC at the beginning of the year.

Lucas Outumuro, the research director at IntoTheBlock, suggests that the pressure from halving rewards is causing miners to hold less Bitcoin, making them more likely to sell their reserves.

In Bitcoin’s proof-of-work (PoW) consensus mechanism, miners receive new Bitcoin rewards for verifying transactions and securing the network. Miner reserves refer to the unsold “fresh” Bitcoin held by miners.

Approximately every four years, mining rewards are halved. The most recent halving occurred on April 20, 2024, reducing rewards from 6.25 BTC to 3.125 BTC. “Historically, this decline has been gradual, so it hasn’t caused significant selling pressure,” says Outumuro.

Despite the reduced rewards, the dollar-denominated mining reserves remain at an all-time high of around $135 billion. This means that although miners hold less Bitcoin, the dollar value of their balance sheets has increased. Sascha Grumbach, CEO of Green Mining DAO, notes that current miners have learned from past cycles. The era of excessive borrowing and holding too much Bitcoin has come to an end.

A report by Coinshares predicts that Bitcoin’s hash rate will rise after the post-halving decline, likely in 2025. The decrease in rewards and increased competition mean that the amount of Bitcoin produced per unit of computational power is decreasing, raising production costs.

Sentiment: Neutral