The so-called crypto winter of 2022, marked by the fall in the prices of crypto assets, put an end to the era of large Bitcoin miners, whose strategy was to maintain the world’s largest cryptocurrency for as long as possible.
Since last year, the big miners that held BTC for as long as possible ended up having to change their business model, choosing to sell the coins, mainly to pay their daily operating expenses, according to a report by the CoinDesk portal.
Keeping Bitcoin on hold is highly cash-dependent, made up of investments on the one hand and expenses like electricity, maintenance, and payroll on the other, an arrangement that has started to give most Bitcoin businesses headaches. Bitcoin mining has been at a low since the collapse of Project Terra in May 2022.
Bitcoin sales in Crypto Winter
Companies in the crypto sector began dumping their Bitcoin reserves in the middle of last year: Core Scientific sold 7,202 BTC in early July, at an average price of $23,000. With the sales, its reserves fell to 1,959 BTC.
Most recently, Marathon Digital (NASDAQ: MARA), which is one of the largest in the industry, sold 1,500 BTC. The company still had 11,392 Bitcoins in reserve at the end of February. At the time, the company did not rule out further sales in the future.
Hut 8 Mining Corp (NASDAQ: HUT), for example, which had not sold Bitcoin since January 2021, recently needed to dispose of 188 BTC to maintain its operations. Following the sale, the company, which had not sold any Bitcoin since January 2021, had a balance of 9,242 BTC at the end of February.
As Tim Rainey, CFO of Bitcoin miner Greenidge Generation, comments: “This selling trend was probably started by the hash drop combined with the need for liquidity during the bear market to fund operations and other obligations,” he told CoinDesk.
Other Bitcoin Hodlers Capitulate Too
It’s not just miners who have been affected. Companies in other segments, which traditionally held cryptocurrencies in reserve, dumped part of their holdings.
In December of last year, Microstrategy sold 704 BTC, for a total price of $11.8 million. The move was unprecedented, as it was the first time the company had sold Bitcoin since it began its strategy of accumulating the cryptocurrency in 2020, still under the leadership of its creator, Bitcoin evangelist Michael Saylor.
Even the US government, the largest holder of Bitcoin, may be rehearsing a sell-off. Earlier this month, around 49,000 BTC was moved between internal wallets. According to recent news, at least 9,825 BTC moved to Coinbase, which could be a sell signal.
Meanwhile, Block, the digital payments company created by Jack Dorsey, the former CEO of Twitter, believes that developers can build better Bitcoin mining rigs and therefore plans to release a “mining development kit.”
The company hopes that the DIY kit will spur innovation in Bitcoin mining hardware. The idea is to build a customized, open source Bitcoin mining system.
By Audy Castaneda