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The amount of Bitcoin held by cryptocurrency miners for over-the-counter (OTC) transactions has surged to its highest level in more than two years, suggesting increased selling activity among miners. According to data from CryptoQuant, OTC desk balances for miners have climbed by 70% over the past three months, reaching approximately 368,000 BTC, valued around $22.36 billion.
Historically, significant increases in Bitcoin (BTC) desk balances have been linked to declines in Bitcoin prices. For example, in May 2018, when OTC desk balances exceeded 400,000 BTC, Bitcoin’s price was $8,475. By December 2018, the price had dropped by 63% to $3,183. Similarly, in November 2021, with Bitcoin’s price near $64,000 and OTC balances at a record high of 500,000 BTC, the price fell 45% to $35,058 by January 2022.
The current rise in OTC desk balances indicates substantial selling activity among miners who prefer OTC transactions to minimize price impact, seeking better execution compared to selling on exchanges.
Despite this, there are factors that could mitigate the downward pressure on Bitcoin’s price. The supply of Bitcoin on crypto exchanges has recently declined, and Bitcoin whales have been accumulating significant amounts of the asset, acquiring approximately 94,700 BTC over the past six weeks. This accumulation by large holders and the reduced exchange supply may provide support to Bitcoin’s price.
Miners are facing increased operational costs and reduced rewards following the Bitcoin halving in April. Current data shows that the cost to mine a Bitcoin exceeds its market price, putting miners at a loss. In the second quarter, miners experienced a decrease in revenue compared to the first quarter, though some have managed to offset losses by expanding their hashrate.
Looking forward, opportunities for Bitcoin miners may arise from diversifying into the energy sector, particularly by supplying energy to artificial intelligence and high-performance computing industries. According to VanEck, Bitcoin miners could generate significant additional revenue by transitioning to provide energy to these sectors by 2027, given their capacity and expertise in energy production.
