The so-called crypto winter of 2022 — marked by the drop in crypto asset prices — put an end to the era of large Bitcoin hodler miners whose strategy was to hold the world’s largest cryptocurrency for as long as possible.
Since last year, large miners who followed this tactic ended up having to change their business model and opted to sell the coins, mainly to pay their daily operating expenses, according to a report by the CoinDesk portal.
Keeping Bitcoin on hodle is something that depends a lot on cash, formed from investments on the one hand and expenses – such as electricity, maintenance and payroll – on the other, an arrangement that has started to give headaches to most Bitcoin companies. Mining with Bitcoin at a low since the collapse of Project Terra in May 2022.
Bitcoin sales in crypto winter
Companies in the crypto sector started to unload their bitcoin reserves in the middle of last year: Core Scientific sold 7,202 BTCs in early July, at an average price of $23,000. With the sales, his reserves dropped to 1,959 BTCs.
At the time, data from Arcane Research revealed that months before Marathon Digital and Riot Blockchain, for example, sold more than they mined in order to stay afloat in the crypto winter.
More recently, Marathon Digital (NASDAQ:MARA), which is one of the largest in the industry, sold 1,500 BTC. The company still held 11,392 bitcoins in reserve at the end of February. At the time, the company did not rule out new sales in the future.
It is worth remembering that its revenue for the fourth quarter of 2022 fell 58% compared to the same period of the previous year, according to a report published on Thursday (16).
Hut 8 Mining Corp (NASDAQ: HUT), for example, which had not sold any bitcoin since January 2021, recently needed to dispose of 188 BTC to maintain its operations. After the sale, the company, which had not sold any bitcoin since January 2021, had a balance of 9,242 BTC at the end of February.
As Tim Rainey, chief financial officer of bitcoin miner Greenidge Generation, comments, “This selling trend was likely initiated by the hash drop combined with the need for liquidity during the bear market to fund operations and other obligations,” he told CoinDesk. .
The prolonged bear market also resulted in the bankruptcy of some miners, such as Core Scientific, which was also affected by the bankruptcy of Celsius. In January of this year, Core had to act to shut down 37,000 mining machines.
In September of last year, Compute North, one of the largest providers of mining data centers in the US, could not resist the crypto winter and had to file for bankruptcy.
Other Bitcoin hodlers also capitulate
But it’s not just miners that have been affected: companies from other segments, which traditionally kept cryptocurrency in reserve, disposed of part of their stocks.
In December of last year, Microstrategy sold 704 BTC, for a total price of $11.8 million. The movement was unprecedented, as it was the first time that the company sold Bitcoin since it began the strategy of accumulating the cryptocurrency, in 2020, still under the leadership of its creator, Bitcoin evangelist Michael Saylor.
Incidentally, even the US government, the biggest holder of Bitcoin, may be rehearsing a mass sale. Earlier this month, around 49,000 BTC were moved between internal wallets. As per recent news, at least 9,825 BTC were moved to Coinbase, which could be a sell signal.
These bitcoins are part of the amount seized in the Silk Road case, an illegal marketplace scheme on the deep web that culminated in the life imprisonment of its creator, Ross Ulbricht.
About a year ago, bitcoin was trading above $41,000 when the signs of crypto winter began. About three months earlier, in mid-November 2021, bitcoin had reached its all-time high of over $64,000.
Last year, the asset reached up to nine uninterrupted weeks suffering losses. Incidentally, BTC and several cryptos follow with big losses compared to the maximums recorded in 2021, even with this week’s high.
Meanwhile, Block, the digital payments company created by Jack Dorsey, the former CEO of Twitter, believes that developers can build better Bitcoin mining platforms and so plans to release a “mining development kit“, or MDK for short. in English.
The company hopes the DIY kit will spur innovation in Bitcoin mining hardware. The idea is to build a custom and open source Bitcoin mining system.