Cryptocurrency market continues to bring notable data to the forefront. According to CryptoQuant, despite a $40 billion flow from mining pools to crypto exchanges, Bitcoin miners’ reserves remained constant in February. On February 28th, miners’ wallet reserves had 1.828 million Bitcoin, a negligible increase compared to 1.827 million Bitcoin on February 1st.
What’s Happening Before the Halving?
CryptoQuant reported that despite maintaining their hold levels, recent price volatilities throughout the week triggered significant sales by miners, with at least 40,000 Bitcoin sold as the cryptocurrency’s price exceeded $52,000 on February 26th. According to Tradingview data, Bitcoin’s price increased by 22% over the last seven days, supported by inflows from exchange-traded funds and market anticipation of the next halving event.
Most of the miners’ sales before the halving occurred in January, with total reserves fluctuating from a peak of 1.840 million Bitcoin to 1.827 million Bitcoin by the end of the month. Historically, miners sell more of their Bitcoin reserves before a halving to maximize profits as the block reward decreases. The halving event is part of Bitcoin’s deflationary mechanism and reduces the rate at which new Bitcoins are produced by lowering the block reward miners receive for verifying transactions.
This event occurs every four years, with the next Bitcoin halving expected around April 19, 2024, which will reduce block rewards from 6.25 to 3.125 Bitcoin. However, mining costs remain the same or may increase as miners expand their operations to stay profitable.
Mining Company Takes Notable Step
Crypto miners are updating their strategies and trying to increase their capital before April. For instance, CleanSpark recently announced its intention to establish an in-house trading desk, which means managing large Bitcoin assets and conducting trade transactions without relying on external brokers. This approach could reduce costs related to trade transactions.
According to an analysis by asset manager CoinShares, CleanSpark is one of the best-positioned companies to overcome a revenue cut. Riot and TeraWulf should also be prepared to cope with the halving:
“We believe Riot, TeraWulf, and CleanSpark are in the best position as we enter the halving process. One of the miners’ main issues is the cost of high sales, general, and administrative expenses. To avoid operating at a loss, the halving event will force them to reduce these costs, otherwise, they may continue to operate at a loss and could be forced to liquidate their HODL balances and other circulating assets.”
CoinShares expects the average production cost for crypto miners post-halving to be $37,856.
