The activity of bitcoin miners is so little known that it is usually surrounded by stories and claims, mostly based on popular beliefs. One of them points out that when these workers sell their funds, they are capable of producing falls in market prices. However, in the 91 report on the state of the network, CoinMetrics found little evidence that miners are responsible for the price drops of bitcoin (BTC).
In its newsletter published this Tuesday February 23, Coin Metrics claims that it is refining its formula for estimating miner activity. In order to gain precision, it takes into account the way in which the wallets that participate in bitcoin mining are structured, and manages to distinguish the addresses linked to the pools and those that are typical of miners. A model that has been used since last year to study the behavior of miners in the chain.
Accurately assessing the degree and impact of miners’ sales is crucial to understanding the market, notes analyst Karim Helmy, who signs the document. It compared the deposits that miners make to the total flows handled by exchanges. Based on this, he said that it is clear that the movements of funds of bitcoin workers do not correspond to the falls that the market may suffer.
The flows mobilized by the addresses linked to the miners barely represent 5.5% of the total funds that enter the exchanges , «and not they are a major source of market volatility, ”the report notes.
Miners are natural sellers of cryptocurrencies. This is because they cover their operational costs, such as payment of electricity or rental of facilities, in fiat currency. For that reason, they must sell part of the income obtained in bitcoin, for block rewards and transaction commissions, to remain profitable, as the Coin Metrics newsletter adds.
Binance and Huobi the favorite exchanges of bitcoin miners
In his research Helmy found that miners go to exchanges to sell their funds. However, among the eight exchanges analyzed so far, Binance and Huobi stand out , which are by far the largest recipients of transfers from miners.
That the miners prefer Binance and Huobi to sell their funds is no surprise, as there are two exchanges that also operate mining pools. It should also be borne in mind that they are two platforms with a strong presence in Asia, where most of the miners are located.
On the other hand, the investigation also observed the amount of flows that enter the exchanges from the miners and analyzes the deposits and withdrawals of the workers compared to the price of BTC. In this sense, found that there is a low correlation between the flows mobilized by workers and the price of the queen cryptocurrency.
Helmy’s investigation further determined that miners sell their funds at OTC counters, from English Over The Counter , which are operations that leave no record
In any case, Coin Metrics adds that, although the study offers a solid basis for understanding the behavior of miners, the analysis is still under development. Its objective is to continue adding data that, until now, has not been estimated, such as, for example, the flows of miners towards other important exchanges within the market, such as Coinbase.
Another study published by CryptoNews last year reveals that 73% of the Bitcoin mining pools pay the full reward to miners and use the method to distribute the rewards for mining known as “Full pay per share” (FPPS or full page per share ). Part of this research highlights the different payment methods that pool participants use to divide mining profits.
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