Bitcoin Mining Reserves Are at a 12-Year Low—Here’s Why

The amount of Bitcoin held in reserve by mining companies has fallen to lows not seen since February 2010, according to blockchain analytics firm IntoTheBlock. And that’s been true for most of this year.

As of Wednesday afternoon, Bitcoin miners have 1.91 million BTC in their wallets, according to IntoTheBlock. Bitcoin miner reserves have been above the 2 million BTC mark—first surpassed on February 19, 2010—for only 46 days since the start of 2022. This illustrates the impact of miners selling their Bitcoin throughout the year, at times selling more in a month than they mined, to compensate for profits that have dwindled as the market has suffered.

IntoTheBlock uses a machine learning algorithm to identify miner wallet addresses and tracks their holdings, including wallets linked to miners or mining pools that accumulate BTC but don’t actively mine it. The aggregate of the BTC held in those wallets makes up the analytics firm’s miner reserve metric.

For reserves to have stayed below the 2 million BTC mark as often as they have this year underscores how dire things have been for the industry. Bitcoin miner reserves initially took a dive below 2 million in July last year on news of the mining crackdown in China, but that figure later bounced back. 

The pain this year has been more drawn out. 

Companies that borrowed millions against their mining equipment, like CleanSpark and Argo, have seen month after month of losses. 

Last month alone, Compute North filed for bankruptcy, Iris Energy sold $100 million in equity to generate some cash, Compass Mining shut down its Georgia operations and one of the largest Bitcoin mining pools, Poolin, froze withdrawals.

The last time that miner reserves were this low was a very different time for Bitcoin. In 2010, the cryptocurrency had only been released as open-source software a year prior, a few months after creator Satoshi Nakamoto published a white paper describing how the peer-to-peer electronic cash worked. 

Bitcoin was first exchanged for U.S. dollars in 2009 on the New Liberty Standard Exchange, when $5.21 could buy 5,050 BTC. At today’s prices, that amount of BTC would be worth almost $97 million.

The Bitcoin mining industry was in its infancy, too. Computer programmer Hal Finney received the world’s first Bitcoin mining reward of 10 BTC for mining block-70 on January 12, 2009. And for a while, miner reserves represented a sizable share of the Bitcoin that was in circulation. 

On the day when miner reserves first surpassed 2 million in February 2010, for example, miners held one in every five Bitcoin that had ever been created. Bitcoin miners’ share of coins in circulation has now dipped below 10%.