Miners Sell More Than They Mined in October — Bitcoin Mining Landscape Overview | by Lumerin Protocol | Lumerin Blog | Nov, 2023

BITCOIN MINING

Data, trends, and insights in the Bitcoin mining industry

Key takeaways:

• Miners sell more Bitcoin than what they mined during October.
• What will happen with Bitcoin mining rewards after the halving?
• A key industry leader is set to acquire a power plant after a win in court.

During the recent crypto rally in October, the top 13 public crypto-mining companies found themselves in a unique position.

They sold more Bitcoin than they actually mined during that month, with a liquidation-to-production ratio of about 105%.

Notable companies like Marathon Digital Holdings and Core Scientific Inc. were among those exceeding their monthly production.

This trend marked a significant increase from previous months when the ratio was considerably lower, indicating that miners were capitalizing on the surge in Bitcoin prices to boost their cash flow or capture higher prices.

Bitcoin’s price surged by 28% in October, reaching an 18-month high of around $35,000, contributing to year-to-date returns of over 100%.

This price increase also saw shares of mining companies like Marathon and Riot more than double in value.

Some miners are using these sales to raise capital in anticipation of the upcoming Bitcoin “halving,” which is a code update that will cut mining rewards by 50% early next year.

It will be crucial for miners to optimize their operations by then, either by increasing their energy efficiency or reducing costs. In this regard, taking profits during the last Bitcoin rally to reinvest in their mining operation seems like a smart choice looking into the long-term future.

As the Bitcoin halving event approaches, the CEO of Barefoot Mining, Bob Burnett, projects a 52.5% reduction in miner rewards.

With fewer than 25,000 blocks remaining before the anticipated halving, Bitcoin miners are on the brink of a significant income cut. The current reward of 6.25 BTC per block will decrease to 3.125 coins post-halving, leading to reduced daily Bitcoin production.

The exact date of the halving is still a subject of speculation, with various projections ranging from March 23, 2024, to April 24, 2024.

However, despite the upcoming halving, Burnett also anticipates that increased transaction fees could lead to a potential resurgence in daily Bitcoin production, possibly exceeding 900 BTC per day by 2027, providing a boost to the mining industry.

Bitcoin miners face a significant impact on their earnings as the halving event approaches, with precise calculations and the adoption of advanced mining technology becoming crucial for strategic planning in the mining sector.

Hut 8 Mining Corp., a Canada-based digital asset mining company, is close to acquiring four small natural gas-fired power plants in Ontario, which would be used to power their cryptocurrency mining operations.

The Ontario Superior Court of Justice approved Hut 8’s bid for the facilities, previously operated by Validus Power Corp., now under the control of a restructuring company due to financial difficulties.

Macquarie Equipment Finance is supporting Hut 8’s bid and would receive a 20% minority equity interest if the transaction is completed.

The acquisition of these gas-fired plants would allow Hut 8 to become a vertically integrated mining operation, making use of idle infrastructure and machinery while providing energy pricing certainty.

Additionally, the facilities could potentially enable revenue-generating activities such as selling energy to the market, mining Bitcoin, and powering high-demand computing applications like artificial intelligence.

The acquisition of these power plants follows an acrimonious history between Hut 8 and Validus, with disputes over a power purchase agreement and default allegations. Hut 8 is making a “stalking horse” bid to acquire the assets, setting a low-end bidding bar to prevent potential underbidding. The transaction is expected to close by the end of the year, pending approval.

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