Bitcoin miners managed to maintain stable reserves in February, despite mining pools transferring around $40 billion to crypto exchanges, as reported by CryptoQuant. As of February 28, miners’ wallet reserves held approximately 1.828 million Bitcoin (BTC), which showed only a marginal difference compared to the 1.827 million held on February 1.
Although the holding levels remained stable, recent fluctuations in the price of BTC led to significant sales by miners. On February 26, at least 40,000 BTC were sold as the cryptocurrency’s price surpassed $52,000, according to CryptoQuant.
Data from Cointelegraph Markets indicates that Bitcoin’s price has increased by 22% in the past week, supported by inflows from exchange-traded funds (ETFs) and market expectations for the upcoming halving.
The majority of miners’ sales prior to the halving occurred in January, with total reserves ranging from a peak of 1.840 million BTC to 1.827 million BTC by the end of the month.
Traditionally, miners sell a higher portion of their BTC reserves before the halving to maximize profits before the block reward decreases. The halving is part of Bitcoin’s deflationary mechanism and reduces the rate at which new BTC is generated, thus decreasing the block reward received by miners for verifying transactions.
This event occurs every four years, and the next Bitcoin halving is expected to take place around April 19, 2024. It will reduce block rewards from 6.25 BTC to 3.125 BTC. However, mining costs may remain the same or even increase as miners expand their operations to remain profitable.
Miners are preparing for the impending reduction in rewards. For example, CleanSpark has recently announced plans for an in-house trading desk, which will allow them to manage and trade their significant Bitcoin holdings internally, reducing associated trading costs. According to CoinShares, an asset manager, CleanSpark is well-positioned to handle the revenue cut. Riot and TeraWulf are also expected to cope with the halving, with CoinShares predicting that the average production cost for crypto miners post-halving will be around $37,856.
Magazine: How to protect your crypto in a volatile market: Insights from Bitcoin OGs and experts