In proof of work blockchains such as Bitcoin, miners play a key role by validating transactions and contributing resources to secure the network. In compensation for their contributions, miners are rewarded with coins which are issued every block. More details on how mining and the Bitcoin halving work can be found in this article.
IntoTheBlock has built a proprietary machine learning algorithm that identifies miners’ addresses and monitors their holdings and activity. For Miner Netflows, IntoTheBlock tracks inflows minus outflows, meaning that if more funds leave miners’ addresses than flow into them netflows will be negative.
Bitcoin Miner Netflows
Miner Netflows is one of the most useful indicators to fully understand the behavior of miners. Since miner inflows and outflows tend to move in tandem, the difference between them is more valuable than either separately.
⭐️ Quick Tip: By analyzing miner netflows, users can gauge if overall miners are accumulating or selling; high positive values point to accumulation, while negative numbers indicate net selling.
In the example above, we can clearly see two sharp drops in miner netflows. This means that the amount leaving miners’ addresses was much higher than the amount entering them. In other words, miner rewards and acquisitions were meager relative to miner outflows. Ultimately, this suggests strong selling activity from miners in light of the Chinese mining crackdown.