Bitcoin mining reserves are at a 12-year low – here’s why

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The quantity of Bitcoin held in reserve by mining companies has fallen to levels not seen since February 2010, according to block chain analytics company IntoTheBlock. And that has been true for most of this year.

As of Wednesday afternoon, Bitcoin minors have 1.91 million BTC in their wallets, according to IntoTheBlock. Bitcoin miner reserves have surpassed the 2 million BTC mark – first surpassed on February 19, 2010 – for just 46 days since the start of 2022. This illustrates the impact of miners selling their Bitcoin all year round, sometimes sell more in a month than they minedto make up for profits that have shrunk as the market has suffered.

IntoTheBlock uses a machine learning algorithm to identify the miner wallet addresses and tracks their holdings, including wallets linked to miners or mining pools that accumulate BTC but do not actively mine it. The aggregate of BTC held in these wallets makes up the analytics firm’s miner pool metric.

The fact that reserves have stayed below the 2 million BTC mark as often as they have this year highlights just how dire things have been for the industry. Bitcoin miner reserves initially dipped below 2 million in July last year on news of the mining crackdown in chinabut that figure then rebounded.

The pain this year has been longer.

Companies that have borrowed millions for their mining equipment, like CleanSpark and Argosuffered month after month of losses.

Only last month Compute North has filed for bankruptcyIris Energy sold $100 million in stock to generate money, Compass Mining close its operations in Georgia and one of the largest Bitcoin mining pools, Poolin, frozen withdrawals.

The last time miner reserves were this low was a very different time for Bitcoin. In 2010, the cryptocurrency had only been released as open-source software a year earlier, months after creator Satoshi Nakamoto released a white paper describing how peer-to-peer electronic money works.

Bitcoin was first traded for US dollars in 2009 on the New Liberty Standard Exchange, when $5.21 could buy 5,050 BTC. At today’s prices, that amount of BTC would be worth nearly $97 million.

The Bitcoin mining industry was also in its infancy. Computer programmer Hal Finney received the world’s first Bitcoin mining reward of 10 BTC for mining Block 70 on January 12, 2009. And for a time, miner reserves made up a significant portion of the Bitcoin in circulation.

On the day that miner reserves first exceeded 2 million in February 2010, for example, miners held one in every five bitcoins ever created. Bitcoin miners’ share of coins in circulation has now fallen below 10%.

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