Mining Companies Liquidate More BTC Than Mined
In October, the top 13 publicly traded crypto mining companies sold more bitcoins (BTC) than they produced. The liquidation-to-production ratio was 105%, meaning they sold all their mined coins plus assets from their holdings.
October’s Sales and Bitcoin Price Rally
Bitcoin’s 28% rally in October to around $35,000 brought the leading digital asset to an 18-month high. The top 13 public mining companies sold 5,492 BTC – worth roughly $164 million, tapping into BTC’s 30% monthly gain.
The ratio of liquidation-to-production was higher than that of July, August, and September, which had 64%, 77%, and 77%, respectively. The ratio peaked at 360% in June 2022 and plunged to around 80% in August of the same year.
Selling Strategy of Mining Companies
Some mining companies have consistently sold all their mined BTC every month. Firms like Marathon, Hut 8, Cipher, CleanSpark, and Bit Digital use a hybrid treasury strategy and liquidated more in October than in previous months. Bit Digital and Hut 8 had the highest individual ratios, liquidating over 300% of their monthly productions.
Preparing for Bitcoin’s Upcoming Halving
Bitcoin miners could sell a higher portion of their mined assets for several reasons, including replenishing their cash reserves or realizing profits off price rallies. Another major reason is to stock up cash in preparation for the upcoming Bitcoin halving event, which would slash their block rewards by half.
The Bitcoin halving occurs approximately every four years or after every 210,000 blocks and will continue until all 21 million BTC have been mined. The last halving event in May 2020 slashed the network’s block reward from 12.5 BTC to 6.25 BTC.
Hot Take: Mining Companies Sell More Bitcoins Than They Mine
In preparation for the upcoming Bitcoin halving event scheduled for April 2024, the top publicly traded crypto mining companies have sold more bitcoins (BTC) than they produced in October. This strategy could be attributed to various reasons such as replenishing cash reserves or realizing profits off price rallies. However, this trend suggests that these companies are making strategic financial moves to prepare for the impact of the upcoming halving on their block rewards.
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