Bitcoin miners are accumulating cryptocurrency amid the current market upturn, Kraken analysts write in a new report. This leads to a “supply shock” and contributes to the growth of the exchange rate.
“Both large-scale entities and small players that secure the network through mining pools seem to be hoarding bitcoins,” said Kraken Intelligence chief executive Pete Humiston.
The exchange’s observations confirm recent reports from public mining companies including Riot Blockchain, Marathon Digital, and Hut 8, all of which have retained their September mined bitcoins. At the same time, some miners provide cryptocurrency with new funding that they use to expand their business.
“We are seeing exchange-traded mining companies such as Argo Blockchain using bitcoins as collateral to attract new capital for further investment,” adds Humiston.
Limited sales of small miners, he said, also do not indicate bearish expectations. On the contrary, this money is used to increase computing power:
“Smaller players are forced to sell on the rise to buy and maintain equipment.”
This behavior of miners is reflected favorably on Bitcoin itself, Kraken says:
“We can view the recent surge in investment in bitcoin mining not only as a new signal of renewed confidence in the digital asset space, but also as evidence of the resilience of the entire network, of which bitcoin itself is the core value proposition.”
Blockchain.com data confirms the rapid recovery of bitcoin hashrate to previous highs that were set before the May mining cap in China.
“The hashrate was only 6 days higher in history,” wrote Charles Edwards, founder of the investment company Capriole. – We are approaching a new maximum in terms of network security. It’s hard to believe in it. “
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