Besides being a round number, the near $20,000 anecdotally appears to be a key pivot for Bitcoin prices. The reason: At least two big Bitcoin miners appeared to “throw in the towel” on digital currency in June.
Specifically, Core Scientific, Inc. (NASDAQ:CORZ) announced on July 5 that it had liquidated 7,202 self-mined Bitcoins during the month of June. The company made US$167 million from the sale. Core Scientific had sold an additional 2,698 Bitcoins in May 2022. The Bitcoin miner held 1,962 Bitcoins as of June 30, 2022 compared to 8,058 as of May 31, 2022.
Another miner Bitfarms Ltd. (NASDAQ: BITF), executed a similar strategy. In June, the company liquidated 3,351 of the Bitcoins it had mined over time, leaving it with 3,144 coins in custody as of June 30, 2022.
A third miner, Riot Blockchain, Inc. (NASDAQ: RIOT), may have launched a similar bitcoin selloff program in May and April when it liquidated 258 and 242 units of the cryptocurrency, respectively. The company sold an additional 300 bitcoins during the month of June.
Marathon Digital Holding, Inc. (NASDAQ: MARA) have yet to release their Bitcoin transactions for June, while Mining Hut 8 (NASDAQ: HUT)reported this morning that it sold no bitcoins during the month.
Prior to these strategy changes, Core Scientific, Bitfarms, and Riot all used a HODL (hold on for life) practice that many retail investors have adopted with respect to their digital currency holdings.
|Basic scientist||Bit Farms||Riot Blockchain||digital marathon||Hut 8 Mining|
|Number of bitcoins held as of June 30, 2022||1,962||3,144||6,654||7,406|
|Number of bitcoins mined in June 2022||1,106||420||421||328|
|Number of Bitcoin SOLD in June 2022||7,202||3,351||300||0|
|Number of bitcoins held as of May 31, 2022||8,058||6,075||6,536||9,941||7,078|
|Number of bitcoins mined in May 2022||1,138||431||466||268||309|
|Number of Bitcoin SOLD in May 2022||2,698||2||258||0||0|
|Number of bitcoins held as of April 30, 2022||9,618||5,646||6,328||9,673||6,769|
|Number of bitcoins mined in April 2022||1,121||405||508||299||309|
|Number of Bitcoin SOLD in April 2022||0||2||242||0||0|
|Number of bitcoins held as of March 31, 2022||8,497||5,243||6,062||9,374||6,460|
There are two possible interpretations of the steps taken by Core Scientific and other miners to turn their backs on their much-vaunted HODL strategies. First, Bitcoin miners are likely well-informed participants in digital currency markets. Miners were operating when cryptocurrency was skyrocketing just a few months ago; Bitcoin was trading at around US$47,000 as recently as the end of March 2022. Perhaps their synchronous decisions to liquidate bitcoin holdings suggest that a darker chapter is yet to come. (It should be noted that the miners may have needed some of the funds from the liquidation for other corporate purposes, such as paying off debt.)
A second, more constructive interpretation is that miners look a lot like a stubborn holder of a financial vehicle who stubbornly hangs on while the price drops, believing he knows more than the broader market. Examples of such behavior are legion in the stock market. Often, when the last stubborn investor sells, that sell represents at least a short-term (and sometimes longer lasting) bottom in the financial instrument.
Of course, it’s hard at this point to decide which scenario is more likely. However, more anecdotal evidence looks likely to come out over the next month, which could reveal the likely route.
Core Scientific, Inc. and Bitfarms Ltd. last traded at US$1.61 and US$1.17, respectively, on NASDAQ.
Information for this briefing was found via Edgar and the sources mentioned. The author has no security or affiliation related to the organizations discussed. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author holds no license.