Bitcoin miners are facing tough times due to continued price uncertainty and global energy shortages.
Moreover, macro factors are conspiring to raise borrowing costs, while access to capital is also drying up as risk appetite declines in the face of recessionary pressures. This situation is particularly bad for listed miners, who typically take out loans to finance the purchase of mining equipment.
Moreover, with Bitcoin’s price hovering around two-year lows, profitability remains tough for all but the most efficient miners.
On-chain Glassnode data analyzed by CryptoSlate reveals a significant drop in BTC held by miners since August. However, it is unclear if this is due to the need for offloading on the exchange.
Bitcoin held by miners
Glassnode’s Bitcoin: Balance in Miner Wallets metric identifies miner wallets and tracks the total supply of BTC held at these addresses.
The chart below shows the upward trend of bitcoin held by miners since the beginning of the year. This led to a steep decline around August when he peaked at 1.86 million BTC, accelerating to a near vertical decline from November onwards.
Market dynamics have now reduced the number of tokens held to around 1.81 million BTC, which corresponds to the same levels seen around November 2021.
Minor net position change
Miner Net Position Change looks at the flow of Bitcoin in and out of miner addresses. In times of stress, such as a dip in price action, miners as a whole tend to distribute mining rewards, which is represented by an outflow from the net position change metric.
The chart below shows that the ongoing uncertainty has caused a significant outflow of funds from miners, dropping to around -20,000 BTC in recent weeks.
The term “outflow” may relate to a sale on an exchange, but for a miner’s net position change metric, tokens leaving a miner’s wallet can also relate to movement to cold storage. Please note that there is a
The chart below shows that 3,500 BTC were transferred from miner wallets to exchanges over the past week. This suggests that most of the decline in miner holdings of bitcoins is due to reasons other than exchange sales.
In early September, the mining pool Poolin announced a liquidity issue and a suspension of mining reward withdrawals.
According to pre-announcements, Poolin is one of the top mining pools, accounting for 12% of the hashrate across the network, reaching 15% when the company peaked in 2020.
However, the liquidity crisis triggered an exodus of participating miners, causing Pullin’s share of hashrate to plummet to 4% at the time.
Rethinking this, Poolin’s hashrate currently accounts for 3% of the network. Moreover, it dropped to 1% in November, indicating that the company’s predicament is not improving.
An analysis of bitcoins held in Poolin wallets shows a sharp decline since early November, when the balance hovered around 22,000 BTC. After relatively stable balances over the next few weeks, it plummeted again in late November, dropping holdings to around 6,000 BTC.
The drop of around 16,000 BTC from Poolin addresses accounts for a significant portion of the overall market decline in miner-held balances.