Bitcoin miners ‘hodling’ as crypto prices fade
By Robert Davis
21:09, 10 June 2022
Bitcoin miners are “hodling” their holdings as the cryptocurrency market continues its correction.
According to Glassnode’s miner net position change, which measures monthly buying and selling activity for miners, there has been a large spike in the amount of bitcoin held since the first week of January when the asset first fell below the $40,000 mark.
Over the last week, the price of bitcoin has dropped by more than 15% to around $35,000 per unit. The move has corresponded with steeper declines for ethereum and cardano, both of which are down more than 25%.
While miners seem to be taking the same approach to their holdings, there are some key strategic differences between them especially concerning when the holdings will be redeployed.
‘The Blue Chip’
For Sue Ennis, VP of Corporate Development at Canada’s Hut8 Mining, the reason why her company is increasing its bitcoin holdings is because they believe it is a blue-chip investment, one that is more stable than its peers.
“Our diversified business model is designed to avoid the need to sell bitcoin with market cyclicality in mind, and we are proud to have the highest amount of self-mined bitcoin on balance sheet of any publicly traded mining company in the world,” Ennis told Capital.com.
According to Hut8’s latest mining data release, the company holds more than 5,500 self-mined bitcoins and is averaging a daily production rate of 8.9 bitcoins.
Ennis added that her company sees the recent market volatility is a sign of bitcoin’s increased value and adoption as retail and institutional investors continue to expand their holdings as well.
“When people can quickly enter and exit positions it is a sign of a highly liquid market so it comes as no surprise that miners would look to increase their holdings during a market down cycle,” Ennis said.
Developing the ecosystem
Charlie Schumacher, corporate communications director at Marathon Digital holdings told Capital.com that the company is stockpiling mined bitcoins because it believes the asset is still in the early stages of its development.
According to Marathon’s latest monthly data, it has more than 8,100 bitcoins under its thumb, which includes those that it has earned from mining and those that it has purchased.
Schumacher added that it makes sense as a business strategy for miners to hold bitcoin as the ecosystem continues to develop. If the asset reaches a point of price stability and becomes a better medium of exchange, then it could serve as a means of funding mining and other business operations.
“You don’t get into mining without being bullish on bitcoin,” Schumacher said. “There is still a lot of room for this ecosystem to grow.”