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 Reserves, IntoTheBlock tracks all large mining pools and aggregates the total amount of holdings in their addresses. This includes addresses linked to miners that may have been acquiring holdings and not just mining them.
Bitcoin miner reserves throughout the miner migration
The Miner Reserves metric is useful to observe changes in miners’ holdings, particularly during significant events like the halving or the Chinese mining ban in May-June 2021. In this case, let’s assess the impact of the Chinese crackdown on crypto miners.
As indicated in the graph above, Miner Reserves had peaked right before the first notice of a ban on mining coming from the Chinese Vice Premier Liu He. Similarly, as the ban started going into effect in Inner Mongolia and other Chinese regions, miner reserves continued to drop.
These drops make sense in this context as miners located in China have to incur costs to ship their equipment internationally. Therefore, the drop in miner reserves is likely to be coming from Chinese miners selling to cover their expenses.
The impact of large events such as the Chinese mining ban can be seen in the level of miner reserves. This indicator is helpful to understand how miners adjust their holdings based on market conditions or external factors such as the example above.