Cryptocurrency mining companies have ramped up their asset creation, with leaders such as Marathon Digital (NASDAQ:) and BitDigital selling more bitcoins than they produced in October, a strategy that has been influenced by recent price increases and expectations for an upcoming bitcoin halving. event. It is scheduled for April 2024.
Bitcoin experienced a surge to an 18-month high of $35,000 in October 2023. This price surge has caused mining companies to sell large amounts of Bitcoin. Together, these companies sold 5,492 BTC worth about $164 million. The industry's liquidity to production ratio has reached 105%, indicating that not only have all newly minted coins been sold, but additional reserves have been depleted.
The upward trend in liquidity did not reverse until October. By June 2022, at the start of the bear market, the liquidity-to-yield ratio had risen to a record 360%. However, in August of the same year, this ratio dropped to 80%. Despite this decrease, the ratio remained high compared to previous months such as July 2023 (64%), August (77%) and September (77%).
A number of companies have stood out in their liquidation efforts. Beat Digital and Hat 8 sold more than 300% of their monthly sales in October. These sales are part of a broader strategy adopted by companies such as Marathon, Hat8, Cipher and ClipSpark (NASDAQ: This approach to hybrid treasuries involves selling assets to take advantage of market growth, building cash reserves and preparing for future events that may affect their performance.
One such event is the expected Bitcoin halving in April 2024. The events will halve the block reward and will occur every 210,000 blocks until all 21 million BTC are mined. Last semester it reduced the block reward from 12.5 BTC to 6.25 BTC in May 2020. The next semester will reduce the reward to 3125 BTC per block, which will greatly affect the profitability of miners and encourage them to increase reserves their early.
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