Bitcoin miners are holding onto their coins and accumulating, despite recent price drops, records on May 12 shows.
Their decision to hang on has been described by one observer as “one of the most sincere displays of conviction in the asset”.
Bitcoin miners are HODLing
Publicly available information reveals the Bitcoin balances of several bitcoin mining companies, including Marathon, Hut, and Bitfarms, increased in the first four months of the year.
This shows their commitment to HODLing rather than liquidating even though they have to meet operational costs.
Despite the declining value of Bitcoin, miners continue to operate their businesses even with lower rewards.
Rather than selling their holdings, they have resorted to selling stocks of their mining businesses to generate funds necessary for sustaining their operations.
This approach reflects the determination, strategy, and dedication of miners to hold on to their mined assets instead of dumping.
Presently, the crypto mining industry is gradually recovering after a challenging period, commonly referred to as the “crypto winter.”
Several notable mining companies, including Compute North and Core Scientific, had to seek Chapter 11 bankruptcy protection in 2022 due to harsh market conditions.
However, most mining firms are now recovering after last year’s contraction and appear to be accumulating coins.
Records show that Marathon, a major player in the crypto mining industry, increased its BTC balance by 1.3% in Q1 2023 to 11, 568 BTC.
Hut 8, on the other hand, reduced their holdings by 0.1% to 9,265. Earlier, the miner had to shut down around 8,000 machines due to a dispute with its energy provider in November 2022. Since then, it has managed to bring only a fraction of its aggregate hash power back online, with approximately 1,000 machines currently running.
Fred Thiel, CEO of Marathon Digital Holdings, described the current situation as a “last-man-standing” scenario. The industry has faced a combination of challenges, including a decrease in the price of Bitcoin, rising energy costs, and increasing mining difficulty.
Profit margins that soared to as high as 90% during the peak of the 2021 boom significantly diminished throughout 2023, financially straining miners. Thiel warns that if bitcoin prices remain suppressed, miners will experience further difficulties, and marginally profitable firms will find themselves in dire straits.
Accordingly, considering what lies ahead, bitcoin mining companies appear to be holding and simultaneously building up their cash reserves.
The upcoming halving event, scheduled for spring 2024, will halve the number of coins awarded to miners, significantly reducing their revenue. Miners must ensure they are financially prepared to weather the situation.
Jeff Burkey, vice president of business development at Foundry, emphasizes that miners who are struggling at present may not survive the halving.