Analyzes the state of Bitcoin miners in the wake of increased regulatory function
- Some US states implemented soft laws for the regulation of crypto mining.
- Miner reserves highlight a lack of incentive for miners to HODL.
Regulators in the US are stepping up efforts in an effort to streamline the crypto industry. This has been clear in recent days with strikes as the main goal. The cryptomining segment also receives its fair share of the regulatory spotlight.
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Several states in the United States, including Oklahoma, Montana, Mississippi, and Missouri, have reportedly introduced cryptomining protection laws.
Bitcoin miners will be happy to know that initial reports show that regulators are taking a soft or friendly stance. The regulations will allow Bitcoin miners to conduct small-scale mining in private residences.
Bloomberg Tax: US states Missouri, Mississippi, Montana and Oklahoma have introduced cryptomining protection laws. The bills would allow small-scale Bitcoin mining in private homes and large-scale mining in areas regulated for industrial use. The bills have sparked opposition…
— Wu Blockchain (@WuBlockchain) 11 February 2023
The same US laws stipulate that large-scale Bitcoin mining should be restricted to areas set aside for industrial use.
Well, what does this mean for the best Bitcoin mining companies? It has been business as usual for the best mining companies such as Core Scientific, Greenidge generation and BIT mining among others.
This recently implemented regulation is not expected to cause major changes in their operations, except for those who operate in designated residential areas.
Bitcoin miner reserves remain within the lower range
When it comes to Bitcoin miner statistics, the current market conditions don’t exactly provide much of an incentive for miners to hold on to their coins.
However, the mine reserve indicator registered some growth in the first week of February.
Source: CryptoQuant
Perhaps a look at Bitcoin miner outflows can give a clearer picture of the state of Bitcoin miners since the beginning of the year. Miner outflows increased drastically in the first three weeks of January as the price of Bitcoin rose.
This indicates that miners took out their profits. However, the outflow of miners has since fallen, and remains within a 5-week low range.
Source: CryptoQuant
These miner statistics highlight a strong influence on Bitcoin’s price action. Miners are more likely to hold on to their coins in hopes of earning more when the price rises. However, this was not the case in January.
My reserve outflows reveal that miners cashed out, perhaps anticipating that the January rally would be short-lived. Bitcoin has already delivered a bearish performance so far this month. It traded at $21,694 after a 10% drop from its YTD high.
Source: TradingView
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The conclusion is that the current laws put in place for crypto miners do not pose many risks to the market. They also represent one country, compared to the global scale on which Bitcoin operates.
