Bitcoin miners are holding more bitcoins than at any point in the past two years as the cryptocurrency continues to trade above $11,000, signalling increased bullishness about future gains.
According to wallet addresses tracked by Glassnode, miners are holding a total of more than 1.82 million bitcoins, setting a two-year high and continuing a noticeable upward trend that began in September 2019. In just the last year, aggregate holdings by miners have increased by roughly 2%, excluding growth from other bitcoin miners not tracked by Glassnode.
There are three possible causes for the increase in total bitcoins held by miners:
First, potential optimism that bitcoin's recent rally will likely continue.
- Miners' holdings data appears to be a bullish signal, according to Thomas Heller, former director at leading mining pool F2Pool, who discussed it with CoinDesk in a private message. Miners seem to feel comfortable holding for a while, he said, possibly in anticipation of a higher price later on.
- Miners aren’t the only ones holding more bitcoins, however. The percentage of all bitcoins that have been inactive for at least one year continues to grow after reaching four-year highs in June.
Second, the rotation in hardware as miners order, receive and deploy new machines, according to Harry Sudock, vice president of strategy at GRIID, a data center and mining infrastructure company.
- This process, which Sudock described as the “hardware cycle,” can take up to six months depending on pricing and order size, he told CoinDesk in a private message. Ultimately, fewer coins need to be sold to cover operational expenses during this retooling period. In addition, with the price of bitcoin so high, relatively few coins need to be sold to pay expenses.
- As CoinDesk previously reported, two publicly traded bitcoin companies, Riot Blockchain and Marathon Patent Group, are both in the process of receiving and deploying hundreds of new machines over the next few months as they scale up their mining efforts.
- As miners deploy new machines, they also enjoyed a 7% monthly revenue increase in July, according to network data analyzed by CoinDesk, thanks to recent price appreciation and increased transaction fees.
Last, the total number of coins held by miners has increased as new mining pools accumulate uncharacteristically large amounts of bitcoin.
- Most notably, a significant percentage of recent overall growth comes from Lubian.com, a little-known mining pool that was largely inactive until March 2020, whose holdings are nearly on par with F2Pool, a mining pool founded in May 2013.
- Over the past few months, the pool’s bitcoin holdings have increased to 9,373 BTC as of Thursday, representing an almost equal percentage gain up from 1 BTC in mid March, according to Glassnode.
- The young mining operation controls the tenth-largest amount of the Bitcoin network’s hashrate, according to rankings by BTC.com.