Crypto Miners Are Stockpiling Bitcoin And Ethereum Rewards
Crypto Briefing | Oct 08, 2021 07:17AM ET
Miners are hoarding billions of dollars worth of crypto. On-chain metrics and company production reports show that Bitcoin and Ethereum miners are holding off from selling their mining rewards. The value of crypto held by miners has reached new all-time highs. Crypto miners appear to be adopting a “HODL” strategy.
Recently released production reports from North American mining companies show a significant increase in the amount of Bitcoin being held by miners. Mining firms Riot Blockchain (NASDAQ:RIOT), Marathon Digital (NASDAQ:MARA), Bitfarms (NASDAQ:BITF), Hut8, Argo Blockchain (NASDAQ:ARBK), and HIVE (NASDAQ:HIVE) have collectively stockpiled more than 20,000 Bitcoin, valued at over $1.1 billion.
On Ethereum, on-chain data also shows an uptick in the amount of ETH being held. According to the behavior analytics platform Santiment, miner balances stand at 532,750 ETH, the highest levels since 2016. The value of the stockpiled ETH has blown past all-time highs and is quickly approaching $2 billion as the second-largest cryptocurrency edges higher.
Instead of selling their mining rewards to cover operating costs and fund expansion plans, mining firms are instead choosing to raise capital in other ways to avoid parting with their crypto. For example, Toronto-based Hut8 recently filed to raise $150 million through a public offering, betting that the appreciation of the company’s crypto assets would make up for the short-term price dip from diluting its shares.
Other companies have started using their mining rewards as collateral to take out loans. Argo Blockchain recently finalized a deal with Galaxy Digital Holdings for a $25 million loan using Bitcoin as collateral.
Get The News You Want
The past several months have been a unique opportunity for North American miners to expand. Following crackdowns on crypto mining in China, the Bitcoin hash rate plummeted, causing the mining difficulty to drop by 28%. As such, companies that continued mining throughout the summer were able to mine record amounts of Bitcoin and Ethereum.
The unwillingness of miners to part with their crypto assets shows widespread bullish sentiment in the industry. Mining companies seem to have decided that the long-term upside potential of holding on to their Bitcoin and Ethereum is too great to pass up.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.