Bitcoin held by miners sinks to 1 year lows; Poolin culpable

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Bit­coin min­ers are fac­ing a chal­leng­ing time due to ongo­ing price uncer­tain­ty and glob­al ener­gy shortages.

In addi­tion, macro fac­tors have con­spired to raise the cost of bor­row­ing, while access to cap­i­tal is also dry­ing up as risk appetite dwin­dles in the face of reces­sion­ary pres­sures. This sit­u­a­tion is par­tic­u­lar­ly bad for pub­li­cal­ly trad­ed min­ers, who typ­i­cal­ly bor­row to fund the pur­chase of min­ing equipment.

What’s more, with the price of Bit­coin float­ing in and around two-year lows, prof­itabil­i­ty remains tight for all but the most effi­cient miners.

On-chain Glassnode data ana­lyzed by Cryp­toSlate reveals, since August, the BTC held by min­ers has dropped sig­nif­i­cant­ly. How­ev­er, it is unclear whether this was dri­ven by the need to offload at exchanges.

Bitcoin held by miners

Glassnode’s Bit­coin: Bal­ance in Min­er Wal­lets met­ric iden­ti­fies min­ers’ wal­lets and tracks the total BTC sup­ply held in these addresses.

The chart below shows an uptrend in Bit­coin held by min­ers since the start of the year. This peaked at 1.86 mil­lion BTC around August, lead­ing to a sharp drop-off, accel­er­at­ing into a near-ver­ti­cal drop since November.

Mar­ket dynam­ics have sunk the num­ber of tokens held to approx­i­mate­ly 1.81 mil­lion BTC at present, which equates to the same lev­el seen around Novem­ber 2021.

Bitcoin: Balance in Miner Wallets
Source: Glassnode.com

Miner Net Position Change

Min­er Net Posi­tion Change looks at the flow of Bit­coin into and out of min­ers’ address­es. Dur­ing times of stress, includ­ing depressed price action, in aggre­gate, min­ers tend to dis­trib­ute their min­ing rewards, rep­re­sent­ed by out­flows from the Net Posi­tion Change metric.

The chart below shows cur­rent ongo­ing uncer­tain­ty has result­ed in sig­nif­i­cant out­flows, from min­ers – dip­ping as low as around ‑20,000 BTC in recent weeks.

Bitcoin: Miner Net Position Change
Source: Glassnode.com

While the term “out­flows” is some­times asso­ci­at­ed with sell­ing on exchanges, it should be not­ed that in the case of the Min­er Net Posi­tion Change met­ric, tokens leav­ing min­ers’ wal­lets may also relate to mov­ing to cold storage.

The chart below shows just 3,500 BTC were sent to exchanges from min­ers’ wal­lets over the past week. This would sug­gest the major­i­ty of the drop in Bit­coin held by min­ers was for rea­sons oth­er than sell­ing at an exchange.

Miners to exchanges
Source: Glassnode.com

Poolin culpable

In ear­ly Sep­tem­ber, min­ing pool Poolin announced liq­uid­i­ty issues and a pause on the with­draw­al of min­ing rewards.

Pre-announce­ment, Poolin was one of the top min­ing pools, account­ing for 12% of the network’s over­all hashrate, and as high as 15% when the com­pa­ny was at its peak in 2020.

How­ev­er, the liq­uid­i­ty cri­sis trig­gered an exo­dus of par­tic­i­pat­ing min­ers, lead­ing to Poolin’s share of the hashrate plum­met­ing to 4% at the time.

Revis­it­ing this, Poolin’s hashrate cur­rent­ly accounts for 3% of the net­work. What’s more, in Novem­ber, this fell as low as 1%, sug­gest­ing the company’s woes have not improved.

Estimated Poolin Hashrate Share
Source: Glassnode.com

Analy­sis of the Bit­coin held in Poolin wal­lets shows a sharp dip from ear­ly Novem­ber when the bal­ance was hov­er­ing around 22,000 BTC. Fol­low­ing a rel­a­tive­ly sta­ble bal­ance over the next few weeks, anoth­er sharp drop occurred in late Novem­ber, drop­ping the bal­ance held to around 6,000 BTC.

The approx­i­mate 16,000 BTC drop off from Poolin address­es account for a sig­nif­i­cant chunk of the market’s over­all decline in bal­ances held by miners.

Bitcoin: Balancce in Miner Wallets - Poolin
Source: Glassnode.com

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