• The amount of BTC in wallets linked to crypto miners fell by 8,426 in this year. This is a continuation of the decline that started in October.
  • The dry season and the impending reward halving in China could explain why Chinese miners are reducing their coin stockpiles.

BTC Price Index and Live Chart – CoinDesk”>(BTC) held by crypto miners has dropped to the lowest level since July 2021 as they run down their coin stashes ahead of the programmed halving of the revenue earned per block.

Data tracked by Glassnode show that the estimated amount of BTC in wallets linked to miners has fallen by 8,426 BTC (530 million dollars) since the beginning of the year, to 1,812,482 BTC. The decline started in the second half October when miners had over 1.83 millions BTC.

The miners add transaction records to the blockchain, the public ledger. Miners are rewarded with new coins for each block. The transaction fees are also paid to them.

The miners currently receive 6.25 BTC for each block. This will be reduced to 3,125 BTC by the halving event, which is a quadrennial occurrence due in April. The revenue per block will drop by 50%. Miners could be using BTC they have stored to purchase more efficient equipment, FRNT Financial said, a Toronto-based crypto platform. This would reduce running costs and improve profitability.

Learn more about the impact of Bitcoin’s ‘Halving.

In a newsletter published on Tuesday, FRNT Financial stated that “Miners might also sell to improve their position before the halving.” This may include purchasing more efficient equipment because of the new economics that will be brought by the halving.

The number of BTC in wallets linked to miners is at its lowest level since mid-2021. (Glassnode)

It is generally accepted that the halving will be a test of miner’s resolve, since it will reduce revenue and increase production costs at the same time. Consolidation of the industry may be possible.

Another reason for the drop in bitcoin balances could be the prolonged Dry Season, which occurs in southwest China from October until March/April. China represents approximately 20% on the Bitcoin network.

In some Chinese regions, it is known that miners add more hardware to the grid during the wet seasons when hydropower becomes plentiful. FRNT Financial stated that it is possible for miners to sell their mining equipment during the dry seasons in order to offset the lack of activity.

Sheldon Reback is the editor.