Bitcoin Miners’ Reserves Fall to Three-Year Low After Halving

The reserves of Bitcoin held by mining companies have dropped to a three-year low following the April upgrade that reduced mining revenue. According to crypto researcher Kaiko, miners now hold approximately 1,510,300 Bitcoins, down 2.4% from the peak in December 2020. This reserve is valued at around $86 billion, constituting about 8% of all Bitcoins in circulation, according to Kaiko.

Miners have been offloading their Bitcoin holdings since the cryptocurrency’s price surge in late 2023, well before the recent halving event. These sales have primarily funded operating costs, as the latest of four upgrades has significantly cut the number of new tokens awarded to miners.

The halving event, which occurred in April, dramatically reduced the main revenue source for mining companies like CleanSpark Inc. and Riot Platforms Inc. The preprogrammed update slashed the rewards for validating blockchain data, commonly known as mining.

For a brief period following the halving, higher network fees helped offset the revenue loss for miners, but this was short-lived. Average fees have since plummeted to $2 from a post-halving high of $143, as per Kaiko’s data.

Interestingly, despite the general trend of selling, public mining companies have increased their Bitcoin holdings by 60% to 54,000 tokens since January 2023, according to US Securities and Exchange Commission filings. Marathon Digital Holdings Inc. recently announced a $100 million Bitcoin purchase.

Core Scientific Inc. reported a second-quarter loss of $804 million, primarily due to a mark-to-market adjustment to its warrants and other contingent value right liabilities. This substantial loss underscores the financial pressures facing the mining industry post-halving.