The amount of Bitcoin held in reserve by mining companies has dropped to the lowest since February 2010, according to blockchain analysis firm IntoTheBlock. And that trend has been steady through most of 2022.
During this week, Bitcoin miners had 1.91 million BTC in their wallets. Bitcoin miners’ reserves have been above the 2 million BTC mark—surpassed for the first time on February 19, 2010—for just 46 days since the start of 2022.
This illustrates the impact on miners selling their Bitcoin throughout the year, sometimes selling more mined, to make up for profits that have waned with a market swinging negatively in recent months.
IntoTheBlock uses an algorithm of machine learning to identify miner wallet addresses and track 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 constitutes the analytics firm’s miner reserve metric.
The fact that reserves have fallen below the 2 million BTC mark as often as they have this year underscores how dire things have been for the industry amid the so-called crypto winter, with the price of BTC plummeting.
Initially, the reserve of Bitcoin miners plunged below 2 million in July last year with the news of the mining crackdown in China, but that number later rebounded.
This year’s slump – and pain – has been more prolonged.
Companies that borrowed millions to finance mining equipment, such as CleanSpark and Argo, saw consecutive monthly losses. In the past month alone, Compute North has filed for bankruptcy, Iris Energy has sold $100 million worth of stock to generate some cash, Compass Mining has ceased operations in Georgia, and one of the largest Bitcoin mining pools, Poolin, has frozen. value withdrawals.
The last time these reserves were this low was at a very different time for Bitcoin. In 2010, the cryptocurrency had been released as open source software just a year earlier, a few months after creator Satoshi Nakamoto published a whitepaper describing how this 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 the current price of the cryptocurrency, that amount of BTC would be worth almost $97 million.
The Bitcoin mining industry was also just getting started. Computer programmer Hal Finney received the world’s first Bitcoin mining reward, around 10 BTC, for mining block-70 on January 12, 2009. And for a while, mining reserves accounted for a sizable portion of Bitcoin. that was in circulation.
On the day these reserves first surpassed 2 million BTC in February 2010, for example, miners held one in five bitcoins that had already been created. Bitcoin miners’ share of coins in circulation has dropped below 10%.