Bitcoin miners
Friends or Enemies? – Blockchain News, Opinion, TV and Jobs
By Marcus Sotiriou, Analyst at the publicly listed digital asset broker GlobalBlock (TSXV:BLOK).
Whilst Bitcoin hovers around $20,000, Bitcoin mining is becoming more and more sustainable. It has been reported that around half a dozen Colorado-based gas and oil companies are teaming up with bitcoin miners in order to implement gas-to-Bitcoin flare mitigation solutions. This is after Colorado banned gas flaring, venting, and the release of raw gas into the atmosphere in November 2020.
It has also been reported that the technology used reduces 99.8% of methane compared to 93% for traditional flaring, all whilst the gas and oil companies are being rewarded with a significant amount of Bitcoin.
In addition, crypto farms in Russia are being supplied with electricity generated by small power plants, which burn associated petroleum gas (APG). APG is a by-product of the extraction of black gold. This does not cost anything for oil companies, as they are required to dispose of APG anyway, but now they can earn extra revenue from APG.
The ability for oil and gas companies to power Bitcoin miners with by-products of their operations, consequently leading to more revenue whilst benefiting the environment, is a great advert for Bitcoin’s future.
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Riot Platforms — one of the world’s largest Bitcoin (BTC) mining companies — has bought 33,280 “next-generation” Bitcoin miners for its Texas facility, costing $162.9 million.
The rigs, which were sourced from mining manufacturer MicroBT, will boost the firm’s self-mining capacity by 7.6 exahashes per second (EH/s) and comes “in advance” of Bitcoin’s next halving cycle, which is set to take place in mid-2024.
Riot Purchases 7.6 EH/s of Next Generation Miners from MicroBT, Manufactured in the United States.
Read more in today’s press release: https://t.co/esLToy798H
— Riot Platforms, Inc. (@RiotPlatforms) June 26, 2023
Riot Platforms CEO Jason Les stated on June 26 that the deal will increase the firm’s self-mining capacity to 20.1 EH/s once the machines are installed in the first quarter of 2024:
“These new miners will contribute an additional 7.6 EH/s to Riot’s self-mining capacity when fully deployed and will further enhance our already strong fleet efficiency in advance of the upcoming Bitcoin halving.”
Les added the rigs we built specifically for “immersion cooling systems,” such as those used at the firm’s Corsicana facility.
Of the 33,280 machines, 8,320 are M56S+ models with a hash rate of 220 terahashes per second (TH/s), while the remaining 24,960 M56S++ are slightly more powerful at 230 TH/s.
Riot said it may also purchase 66,560 M56S++ models before December 31, 2024, adding 15.3 EH/s to the firm’s self-mining capacity. The company may choose to exercise this option in whole or in part.
Join our team as they take you through Riot’s production and operations updates for the month of May. Riot produced 676 #Bitcoin and had a deployed hash rate of 10.5 exahash per second.
Hear from Riot’s VP of Research, @BitcoinPierre, as he touches on Riot’s active community… pic.twitter.com/lD3YJVkMct
— Riot Platforms, Inc. (@RiotPlatforms) June 16, 2023
Despite the news, Riot’s share price fell 7.2% to $10.77 on June 26, according to Google Finance.
Related: Buying Bitcoin is preferable to BTC mining in most circumstances — Analysis
Meanwhile, on June 21, Bitcoin miner Akron Energy announced that it bought a 200-megawatt (MW) mining facility in Hannibal, Ohio, for an undisclosed amount.
It’s the Sydney-based firm’s first expansion into the United States following a $26 million raise on June 20.
The firm plans to immediately complete the first design stage of the Hannibal facility, which it hopes will provide 100 MW of power.
The hosting services will be provided to the firm’s institutional-scale clients in the Bitcoin industry.
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On-chain data shows that Bitcoin miners may have been selling at a historical rate recently, something that could be bearish for the asset’s price.
Bitcoin Miner Inflow To Exchanges Has Registered A Spike Recently
According to data from the on-chain analytics firm Glassnode, miner exchange inflows hit a peak value of $70 million recently. The “miner inflow to exchanges” is an indicator that measures the total amount of Bitcoin that miners are transferring to the wallets of all centralized exchanges.
When the value of this metric is high, it means the miners are sending a large number of coins to these platforms currently. Generally, these chain validators deposit their BTC to exchanges for selling-related purposes, so this kind of trend can have a bearish effect on the value of the cryptocurrency.
On the other hand, low values suggest the selling pressure coming from the miners may be low right now, as this cohort isn’t depositing any significant amounts to exchanges at the moment.
Now, here is a chart that shows the trend in the Bitcoin miner inflow to exchanges over the last few years:
The value of the metric seems to have been quite high in recent days | Source: Glassnode on Twitter
As displayed in the above graph, the Bitcoin miner inflow to exchanges has observed a spike in its value recently. This suggests that miners have been sending rather large amounts to these platforms during the past couple of weeks.
These high values of the indicator have come as the cryptocurrency has been gradually heading downwards. This may imply that the recent market environment has made some of the miners panic sell their holdings.
Since these inflows have become elevated, the asset’s value has only extended its decline further, as it has now dropped below the $26,000 level. This recent decline in the price may be fueled in part by the dumping being done by this cohort.
From the chart, it’s visible that the peak of these inflows observed on 3rd June saw the indicator reach a value of around $70.8 million. This is a historically extraordinary level for the metric as only two trading days in the entire lifetime of the coin have seen the miners depositing at a larger scale.
Both of the instances where miners sent larger amounts to these platforms took place way back during early 2021, when the bull market was in full flow. The peak inflow spike back then (that is, the largest value the metric has ever recorded) measured to about $101 million, implying that the current surge is about $30.2 million away from it.
Naturally, Bitcoin miners selling at such a high rate recently can be bad news for the market. It now remains to be seen whether these chain validators continue to sell more in the near future, or if they are done with their dumping spree for now.
BTC Price
At the time of writing, Bitcoin is trading around $25,900, down 3% in the last week.
BTC looks to have declined in the past few days | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, Glassnode.com
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Bitcoin has now dipped below the $27,000 level as on-chain data shows the miners have possibly been selling the asset recently.
Bitcoin Miner Reserve Has Taken A Sharp Plummet Recently
As pointed out by an analyst in a CryptoQuant post, miners have taken out about 1,750 BTC from their wallets during the past day. The relevant indicator here is the “miner outflow,” which measures the total amount of Bitcoin that miners are transferring out of their wallets currently.
The counterpart metric of the outflow is called the “inflow,” and it naturally tracks the total number of coins going into the addresses of these blockchain validators.
Here is a chart that shows the trend in the Bitcoin miner outflow, as well as the inflow, over the last few weeks:
Looks like the value of the outflow has been pretty high in recent days | Source: CryptoQuant
Whenever the miner inflow has a high value, it means that this cohort is depositing a large amount of Bitcoin into their wallets. Such a trend, when prolonged, can be a sign that the miners are accumulating right now. Naturally, this can have bullish implications for the price.
When the outflow is high, on the other hand, it suggests that a large amount of the asset is exiting from the supply of the miners. Generally, the main reason why these holders transfer their coins out of their wallets is for selling-related purposes, so this kind of trend can be bearish for the cryptocurrency’s value.
In the above graph, it’s visible that the miner inflow has been at relatively low values during the past day, implying that these investors aren’t depositing any significant amounts to their wallets.
The miner outflow, however, has registered a pretty high spike in the same period. In total, around 1,750 BTC ($47 million) has exited the supply of the miners with this surge in the indicator.
Since there haven’t been any inflows to counteract these outflows, a net amount of the asset has now left the miners’ wallets. This would mean that if the outflows were made for selling purposes, a net bearish effect should appear on the price.
An indicator that helps better identify whether these transfers were for selling or not is the “miner to exchange flow,” which tracks only the miner outflows heading towards centralized exchanges.
Usually, this cohort uses the exchanges when they want to take part in distribution. As shown in the above chart, however, the metric has remained low recently, meaning that these outflows haven’t directly entered into the wallets of these platforms.
Though, the quant has discovered that the destination wallet of the 1,750 miner outflow made another transfer, which was indeed towards an exchange. “There is a high probability that 1,750 BTC ultimately went to Binance,” explains the analyst.
When these outflows took place yesterday, Bitcoin was above the $27,000 level. Following them, however, the asset has observed a plunge and is now below this mark, suggesting that this latest selling pressure from the miners may have been behind the decline.
BTC Price
At the time of writing, Bitcoin is trading around $26,800, up 2% in the last week.
BTC has declined today | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, CryptoQuant.com
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