Bitcoin mining reserves are at a 12-year low – here’s why

The amount Bitcoin held in reserve by mining companies has fallen to lowest levels not seen since February 2010, according to blockchain research firm IntoTheBlock. And that has been true for most of this year.

As of Wednesday afternoon, Bitcoin miners has 1.91 million BTC in his wallet, according to IntoTheBlock. Bitcoin miner reserves have been above the 2 million BTC mark – first surpassed on February 19, 2010 – for just 46 days since the start of 2022. This illustrates the impact of miners selling their Bitcoin all year round, at times sell more in a month than they mineto compensate for profits that have declined as the market has suffered.

IntoTheBlock uses a machine learning algorithm to identify miners wallet addresses and tracks their holdings, including wallets associated with miners or mining pools that accumulate BTC but do not actively mine it. The collection of BTC held in these wallets makes up the analytics firm’s mining reserve calculation.

That reserves have stayed below the 2 million BTC mark as often as they have this year underscores just how dire things have been for the industry. Bitcoin miner reserves initially took a dive below 2 million last July on news of mining in Chinabut that figure later returned.

The pain this year has been more extensive.

Companies that borrowed millions against their mining equipment, which CleanSpark and Argohave seen month after month of losses.

Just last month, Compute North filed for bankruptcyIris Energy sold $100 million in equity to generate some money, Compass Mining shut down operations in Georgia and one of the largest Bitcoin mining pools, Poolin, frozen outlet.

The last time miner reserves were this low was a very different time for Bitcoin. In 2010, the cryptocurrency had only been released as open source software a year before, a few months after creator Satoshi Nakamoto published a white paper which describes how peer-to-peer electronic cash worked.

Bitcoin was first traded against the US dollar in 2009 on the New Liberty Standard Exchange, when $5.21 could buy 5,050 BTC. At today’s prices, that amount of BTC would be worth nearly $97 million.

The Bitcoin mining industry was also in its infancy. Computer programmer Hal Finney received the world’s first Bitcoin mining reward of 10 BTC for mining block-70 on January 12, 2009. And for a while, miner reserves represented a significant proportion of the Bitcoin in circulation.

For example, on the day miner reserves first exceeded 2 million in February 2010, miners held one in five Bitcoins ever created. Bitcoin miners’ share of coins in circulation has now dropped below 10%.