Bitcoin Miners Aren’t Responsible for Recent Price Dips, Data Shows

“Miners are selling” is a popular trope used to explain bitcoin’s occasional downward price action. But on-chain data doesn’t support this narrative, according to analysts and mining pools themselves.

After bitcoin’s correction earlier this week to the tune of nearly 30%, miners were a popular scapegoat. But miners have been extremely consistent in their selling habits for months, according to network data collected by Glassnode and analyzed by CoinDesk.

For the past six months, weekly bitcoin flows from mining wallets to exchanges have been steady despite the cryptocurrency’s more than 330% gains over the same period. The only anomalous activity seen among mining wallets happened well before bitcoin’s correction. 

Since July 2020, miners have sent an average of 2,100 coins per week to exchanges, per CoinDesk Research. Miners are currently on track to finish another extremely average week with only nearly 1,200 coins transferred from their wallets for cryptocurrency exchanges.

Total bitcoin transfers from mining wallets to exchange addresses.

Source: Glassnode, CoinDesk Research

Confirming this observation, Coin Metrics senior analyst Karim Helmy told CoinDesk there isn’t any on-chain data supporting increased miner selling.

“BTC-denominated gross inflows and outflows out of mining wallets have both remained stable, as have net flows,” Helmy said in a direct message.

The timing is off

An unusually large reduction in mining wallet supply, however, did occur over a recent four-day period from Dec. 26 to 30. During this period, the aggregate balance of mining wallets dropped by 21,000 BTC, a 1% decrease. 

But instead of possibly causing a correction, these transfers happened while bitcoin was climbing from $26,000 to $29,000. Over the next nine days, moreover, bitcoin’s price gained another 43% before temporarily topping out just below $42,000 and falling nearly 30% into Monday morning.

These coins don’t appear to have ever been sent to exchanges, per Glassnode data. Over the four-day period, exchange addresses received a total of less than 2,400 coins from mining wallets, an amount far less than the 21,000 withdrawn from mining wallets.

Total BTC balance of bitcoin miner addresses

Source: Glassnode, Coin Metrics, CoinDesk Research

Even if every coin sent by miners exchanges were instantly sold at market, however, their order would represent a tiny percentage of daily trading volume. 

Miners sent 1,890 BTC to exchanges on Dec. 26, 2020, worth roughly $48 million at the time and the largest single-day transfer in the past year. That same day, Binance – currently the largest cryptocurrency exchange by volume – reported over 148,000 BTC in volume on its BTC/USDT pair, the exchange’s largest bitcoin market. 

Assuming miners sold all their coins on one market at one exchange, they would represent 1.3% of its daily volume. 

Pools are stacking, not selling.

Leading mining pools are in fact increasing their bitcoin holdings, not liquidating them, with the balances belonging to miners at F2Pool and Lubian – the two largest mining pools by their individual holdings – steadily increasing for the past eight months, per Glassnode. 

“I’m not sure what addresses they’re watching,” said Poolin CEO Kevin Pan, calling anything showing a significant increase in miner selling “maybe fake data.” 

Read more: Bitcoin Plummets as Miners Sell Inventory, Spot Markets Panic

Even though Slush Pool doesn’t closely track what their miners do with their bitcoin payouts, engineer and technical writer Daniel Frumkin told CoinDesk, “We know that many of our miners are long BTC and only sell the portion of their revenue that’s needed to cover costs and manage risk.”

Thus, when the price drastically increases, Frumkin explains, miners are able to and in fact do sell fewer bitcoins, not more since the price appreciation boosts their profit margins per coin mined. 

So, who is selling?

More than likely, recent price dips are primarily caused by U.S. investors realizing some profits.

Read more: Guggenheim CIO Says Bitcoin ‘Should Be Worth’ $400,000

For example, Guggenheim CIO Scott Minerd took to Twitter Sunday saying it’s “time to take some money off the table,” referring to bitcoin, after telling CNBC a month ago that bitcoin “should be worth” $400,000. Significant selling activity on Coinbase over the weekend and Monday also signaled profit taking from U.S. investors. 

Regardless of what catalyzed it though, bitcoin’s latest correction wasn’t from miners selling their bitcoins. In fact, they’re accumulating more. 



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Tether Mints Record 2B USDT in One Week

Tether printed two billion dollar-backed tokens last week, a new record for the leading stablecoin project.

Over 24.6 billion tethers now circulate across Ethereum, Tron and Bitcoin’s Omni Layer, per data from Coin Metrics, up from 4.8 billion one year ago. 

The growth comes from a variety of factors, said Sam Trabucco, quantitative trader at Alameda Research. “Some [people] don’t put trust in their local banks or currencies,” he said, in which case using USDT is the “most liquid USD-like exposure the market has access to.” 

Growth also comes when traders start to “aggressively sell BTC into USDT” or vice versa, Trabucco noted, which can cause the dollar-pegged token to temporarily trade above or below its peg.

For nearly all of January so far, USDT has traded slightly above $1 until early Monday morning when it dropped below the mark, per market data from U.S.-based cryptocurrency exchange Kraken. 

Per Tether and Bitfinex CTO Paolo Ardoino, new deep-pocketed institutional bitcoin investors like MicroStrategy or Ruffer Invest executing over-the-counter (OTC) buy orders has also cause significant USDT supply growth.

“Among Tether customers are all the major OTC desks and high frequency trading firms in the space,” Ardoino told CoinDesk in a direct message. Taking the buyer’s funds, OTC desks will routinely convert to USDT and spread the buying pressure across all possible liquid venues, creating demand for more stablecoins. 

Trabucco also noted “heightened volumes” across all cryptocurrency trading venues over the past few weeks combined with “the ability to use USDT as collateral for an increasing number of derivatives products” as additional reasons for tether’s substantial supply growth. 

For Tether, all of these combined market dynamics “have led to an increase in creation”, Trabucco said.

Concurrent with its meteoric supply growth, increased attention has been paid to questions about Tether’s backing, an issue that is even the subject of an inquiry by the New York State Attorney General’s office. 

Per prior court statements, Tether reserves include cash, short-term reserves and other cryptocurrencies. But no bank statements or legal documents supporting this claim have been published since 2018, when Bahamas-based Deltec Bank published an unsigned letter affirming that Tether held $1.8 billion in reserves, matching the amount of USDT issued at the time.

In April 2019, Tether’s supply was only about 74% backed by fiat equivalents, per a statement from its general counsel. But, reiterating a later statement made in November 2019, Ardoino took to Twitter on New Year’s Eve saying, “Tether is fully backed, full stop.”



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Bitcoin Miners Saw 33% Revenue Increase in December

Bitcoin miners generated an estimated $692 million in revenue in December, up 33% from November, according to on-chain data from Coin Metrics analyzed by CoinDesk.

Extending November’s own 48% increase, miner revenues continued to soar as bitcoin rallied over 300% last year, briefly trading above $29,000 for the first time ever on New Year’s Eve. 

Revenue estimates assume miners sell their BTC immediately.

Measured by per terahash per second (TH/s), miner revenues nearly tripled in the past three months, reaching $0.284 Thursday, per data from Luxor Technologies, its highest level since August 2019, as CoinDesk previously reported. 

Network fees brought in $68.3 million in December, or nearly 10% of total revenue, a slight percentage decrease from the 10.5% of revenue represented by fees in November. 

Fees were quite volatile in December, bouncing between $4 to all the way to above $12 throughout the month, per Coin Metrics. 

Notably, fees as a percentage of total revenue continues a strong upward trend since April, prior to the network’s third-ever block subsidy halving in May. Increases in fee revenue are important to sustain the network’s security as the subsidy decreases every four years.

Taking advantage of the revenue increase, miners are bringing more machines online, pushing the network’s difficulty to record highs after Saturday’s adjustment. 

What’s more, miners have ordered so many new machines to capitalize on the period of increased profitability that leading manufacturer Bitmain, for example, has sold out until August even after nearly doubling the price of some models. 



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