Cryptoquant

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100%: Public Bitcoin miners sold almost everything they mined in 2022

December 28, 2022 Coin Telegraph

Argo

Publicly listed Bitcoin miners sold off nearly everything they mined in 2022 but appear to have started accumulating reserves once again.

Publicly listed Bitcoin (BTC) miners sold off almost all of the Bitcoin they mined throughout 2022, leading to a debate over whether the sales created "a persistent headwind" for the Bitcoin price or not.

Analyst Tom Dunleavy from blockchain research firm Messari shared the data in a Dec. 26 tweet, indicating that approximately 40,300 of the 40,700 BTC mined by Core Scientific, Riot, Bitfarms, Cleans Park, Marathon, Hut8, HIVE, Iris Energy, Argo and Bit Digital from Jan. 1 to Nov. 30 was sold off.

BTC miners sell roughly 100% of the coins they mine

The 10 public bitcoin miners
detailed here mined ~40.7k BTC and sold ~40.3k in 2022

This is a persistent headwind for BTC and for no other reason a good thesis to be bullish the ETHBTC ratio trade pic.twitter.com/L1iI6Z07p7
— Tom Dunleavy (@dunleavy89) December 26, 2022

The reserves held by mining firms have decreased considerably during the latter half of 2022, particularly throughout November, as the crypto industry reeled from the effects of the FTX fallout.

*Miner reserves vs Bitcoin price from Jul. 1 to Dec. 28. Source: CryptoQuant.*

Dunleavy believes that miners consistently selling off newly produced Bitcoin places downward pressure on the price of the leading cryptocurrency.

However, some industry commentators such as BitMEX’s former CEO, Arthur Hayes, believe the selling pressure created by the increased sales of Bitcoin miners is negligible.

He opined in a Dec. 9 blog post that “even if miners sold all the Bitcoin they produced each day, it would barely impact the markets at all.”

According to Bitcoin Visuals, on Dec. 26 the daily trading volume for Bitcoin was $12.2 billion. The outflow from miners on the same day, according to CryptoQuant, was 919 BTC ($15.35 million), which represents just 0.13% of the total volume traded.

Miner's reserves have rebounded slightly during December, increasing by nearly 1%. The figure contributes to the view shared in a Dec. 27 post by crypto analyst IT Tech that the situation for miners appears to be stabilizing.

#Bitcoin miners - update. Is there anything to worry about?
1.
Miner Outflow
Miner Inflow
Miner Reserve
White line on the bottom - miner to Exchange flow

2. Mining difficulty
3. Miner selling power
4. Hashrate 7D MA

Full analysishttps://t.co/E3o0cgaNxu
— IT Tech (@IT_Tech_PL) December 27, 2022

Miners have faced significant headwinds throughout the year, with high electricity prices, falling crypto market prices and a higher mining difficulty eating into their bottom line.

With the cost of production for miners increasing while the Bitcoin price has been decreasing, miners such as Core Scientific have been forced to sell some of their reserves at a loss to fund their ongoing operations and efforts to expand.

CryptoQuant verifies Binance’s reserves, reports no ‘FTX-like’ behavior

December 16, 2022 Coin Telegraph

Binance

Binance has faced a FUD-storm this week but a new CryptoQuant audit has verified its proof of reserves.

Blockchain analytics provider CryptoQuant has released a report analyzing the recently released proof of reserves audit of the world’s largest crypto exchange, Binance.

Centralized exchanges have been cast into the spotlight over the past month following the collapse of FTX, none more so than Binance which has been scrambling to reassure customers and investors that it has sufficient reserves and is fully backed.

A report by CryptoQuant released on Dec. 14 says its analysis confirms that Binance reserves are accounted for.

Earlier this month, Binance released its proof-of-reserves report but it was criticized as being an “Agreed-Upon-Procedure” and not a full audit.

Additionally, the report didn’t address the effectiveness of internal financial controls, according to the former chief of the Securities Exchange Commission's Office of Internet Enforcement, John Reed Stark.

But CryptoQuant has backed the findings by audit firm Mazars stating that liabilities reported by Binance are very close to its estimation of 99%.

“The report shows Binance’s BTC liabilities (customers deposits) are 97% collateralized by the exchange assets. Collateralization increases to 101% when the BTC lent to customers is accounted for.”

What does Binance's Proof of Reserve (PoR) report tell us from an on-chain perspective?

A short thread @binance @cz_binance pic.twitter.com/2vAoOmFb63
— CryptoQuant.com (@cryptoquant_com) December 15, 2022

The analytics firm added that on-chain data suggests Binance’s ETH and stablecoin reserves are “not showing 'FTX-like' behavior at this point.”

“Additionally, Binance has an acceptable ‘Clean Reserve,’ which means its own token, BNB, is still a low proportion of its total assets,” it reported.

According to data provider Nansen, around 10% of Binance reserves are held in its token. Binance currently holds $60.4 billion in total assets in their publicly disclosed addresses, $6.2 billion of that total was BNB, it reported.

Binance has faced a lot of FUD (fear, uncertainty, and doubt) this week following $5 billion worth of withdrawals from the exchange on Dec. 13. Fears of a liquidity crisis and another bank run scenario started to escalate.

However, the situation stabilized the following day and CEO Changpeng Zhao reported that the outflow wasn’t even in the top five largest for the exchange.

In a Twitter Spaces event, CZ also suggested that 99% of people were not equipped for self-custody of their crypto and would likely lose it one way or another.

Realized losses from FTX collapse peaked at $9B, far below earlier crises

December 15, 2022 Coin Telegraph

Realized losses from FTX collapse peaked at B, far below earlier crises

3AC

Weekly-realized losses peaked at $20.5 billion when Terra Luna (LUNC) imploded and reached $33 billion when 3AC and Celsius collapsed, according to Chainalysis.

Blockchain analytics firm Chainalysis has attempted to put the FTX collapse into perspective — comparing peak weekly-realized losses in the wake of the exchange’s collapse compared to previous major crypto collapses in 2022.

The Dec. 14 report found the depegging of Terra USD (UST) in May saw weekly-realized losses peak at $20.5 billion, while the subsequent collapse of Three Arrows Capital and Celsius in June saw weekly-realized losses peak at $33 billion.

In comparison, weekly realized losses during the FTX saga peaked at $9 billion in the week starting Nov. 7, and have been reducing weekly since.

1/ Our data suggests that FTX’s demise hasn’t been crypto investors’ biggest issue this year. Both the depegging of Terra’s UST token & the collapse weeks later of Celsius & Three Arrows Capital (3AC) drove much bigger realized losses. https://t.co/tWpX9qjY6o pic.twitter.com/TI2eJSVXaW
— Chainalysis (@chainalysis) December 14, 2022

Chainalysis said the data suggests that by the time the FTX debacle took place in November, investors have already been hit with the “heaviest” crypto events this year.

“The data [...] suggests that as of now, the heaviest hitting [crypto] events were already behind investors by the time the FTX debacle took place.”

The analytics firm calculated total realized losses by looking at personal wallets and measuring the value of assets as they were acquired and subtracting the value of these assets at the time they were sent elsewhere.

However, the data may still have overestimated realized losses, as it counted any movement from one wallet to another as a sale event. Chainalysis aalso noted that the chart doesn’t take other statistics into account, such as user funds stored on FTX’s exchange which are frozen.

“We can’t assume that any cryptocurrency sent from a given wallet is necessarily going to be liquidated, so think of these numbers as an upper bound for realized gains of a given wallet,” it explained.

While Chainalysis’ data covers realized losses, on-chain analytics platform CryptoQuant recently shared data on how net unrealized losses for Bitcoin (BTC) was impacted following the FTX collapse.

It found that unrealized losses for BTC maxed at -31.7% following the FTX collapse compared to the collapse of 3AC/Celsius and Terra Luna, which only peaked at -19.4%.

*Net unrealized profit/loss for Bitcoin. Source CryptoQuant.*

Analytics data firm Glassnode also highlighted the high level of unrealized losses following the FTX collapse in a Nov. 17 tweet, comparing it to the peak of -36% seen during the 2018 bear market.

#Bitcoin Long-Term Holders are currently experiencing acute financial stress, holding an average of -33% in unrealized losses.

This is comparable to the lows of the 2018 bear market, which saw a peak unrealized loss of -36% on average.

Chart: https://t.co/qIGAxtSyGZ pic.twitter.com/BBtbOtApy1
— glassnode (@glassnode) November 17, 2022

The gains or losses associated with an investment are considered unrealized up until the point that the investment is sold. The act of selling "realizes" these losses or gains. Unrealizes losses are also known as paper losses.

$165,000,000 in Bitcoin Linked to Mt. Gox Suddenly Moves As Quant Analyst Issues Warning

November 25, 2022 The Daily Hodl

10,000 BTC moves off crypto wallet linked to Mt. Gox hack

November 24, 2022 Coin Telegraph

chainalysis

The crypto was dormant in the account for over seven years and with the move, a majority found its way to personal wallets.

A crypto wallet belonging to the shutdown crypto exchange BTC-e has just moved 10,000 Bitcoin (BTC), currently worth over $165 million, to various exchanges, personal wallets, and other sources on Nov. 23.

A Nov. 23 Chainalysis report suggested while this withdrawal is the largest made by BTC-e since April 2018, BTC-e and WEX — an exchange which is thought to be BTC-e’s successor — both sent small amounts of BTC to Russian electronic payments service Webmoney on Oct. 26 before making a test payment on Nov. 11, then transferring out a further 100 BTC on Nov. 21.

*The movement of BTC belonging to BTC-e and WEX wallets. Image:* *Chainalysis*

Of the total amount sent, 9,950 BTC is thought to still be located in personal wallets, while the rest was moved through intermediaries before ending up at four deposit addresses in two large exchanges.

Blockchain analytics firm Cryptoquant co-founder and CEO, Ki Young Ju, also verified the findings noting 0.6% of the funds were sent to exchanges and may represent sell-side liquidity.

In a Nov. 24 tweet, Young Ju shared images of the transfer highlighting the BTC had been in the wallet for over seven years.

7-year-old 10,000 $BTC moved today.

No surprise, it's from criminals, like most of the old Bitcoins. It's the BTC-e exchange wallet related to the 2014 Mt. Gox hack.

They sent 65 BTC to @hitbtc a few hours ago, so it's not a gov auction or something.https://t.co/6LnCxFAJfX https://t.co/YdPrvJafxY pic.twitter.com/Sp2higUqbq
— Ki Young Ju (@ki_young_ju) November 24, 2022

Young Ju also mentioned that 65 BTC had been transferred to the crypto exchange HitBTC and called on them to suspend the account for suspicious activity.

Mt. Gox was a Tokyo-based cryptocurrency exchange that once accounted for more than 70% of Bitcoin transactions. In 2014, the exchange was hacked with thousands of Bitcoin stolen, the exchange filed for bankruptcy shortly after.

BTC-e, which had its servers located in the United States, had its website shut down and funds seized by the Federal Bureau of Investigation (FBI) in 2017 after allegations that it was involved in money laundering, including crypto stolen during the Mt. Gox exchange hack.

According to Chainalysis, at the time of its shutdown BTC-e still held “a substantial amount of Bitcoin,” and in April 2018 moved over 30,000 BTC out of its service wallet.

While the owners of BTC-e attempted to remain anonymous, Alexander Vinnik is thought to be the main operator and has been embroiled in legal battles for the last five years as a result.

A WizSecurity report released in 2017 alleged that BTC-e and Vinnik were directly involved in the theft of Mt. Gox Bitcoin and user funds, with the latter being forced to suspend trading and close its website after the losses.

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Binance CEO shares ‘two big lessons’ after FTX’s liquidity crunch

November 9, 2022 Coin Telegraph

bnb

CZ took to Twitter on Nov. 8 sharing "two big lessons" that crypto companies should learn amid the downfall of crypto exchange FTX.

Binance CEO Changpeng “CZ” Zhao has shared his take on "two big lessons" to be learned from the FTX saga, saying cryptocurrency firms shouldn’t use their own tokens as collateral and should also keep “large reserves.”

In a Nov. 8 tweet, Zhao laid out two learnings after the significant “liquidity crunch” at FTX which has ultimately resulted in a non-binding letter of intent from Binance to acquire the struggling exchange.

Two big lessons:

1: Never use a token you created as collateral.

2: Don’t borrow if you run a crypto business. Don't use capital "efficiently". Have a large reserve.

Binance has never used BNB for collateral, and we have never taken on debt.

Stay #SAFU.
— CZ Binance (@cz_binance) November 8, 2022

Zhao shared that his first lesson is to ensure a firm's collateral should not consist of a token that it has created, and claims his exchange’s token — Binance Coin (BNB) — has never been used as collateral for its services.

FTX’s liquidity issues appeared to have come after a Nov. 6 tweet from Zhao saying Binance would be liquidating its holdings of FTX token (FTT) following “recent revelations” related to reported ties between FTX and the trading firm Alameda Research showing the firm had significant FTT holdings.

While Binance does not currently disclose proof of what reserves it uses as collateral, Zhao mentioned in a Nov. 8 tweet that in an effort to be fully transparent Binance will soon provide proof of reserves, adding:

“Banks run on fractional reserves. Crypto exchanges should not.”

Zhao’s second lesson from the downfall of FTX is that crypto businesses shouldn't be borrowing, and instead should opt to maintain large reserves — which could be in reference to FTX users complaining of sluggish withdrawals on Nov. 7, sparking rumors the exchange didn't have enough to cover user funds.

Zhao's tweet confirming Binance's FTT holdings liquidation ended up triggering what some called a “bank-run” on the exchange, with analytics platform CryptoQuant data revealing that FTX’s Bitcoin (BTC) balance had fallen by 19,956 on Nov. 7 alone.

At the time of writing, FTT is down 75% in the last 24 hours, with the last price around $5.70 at the time of writing compared to its opening price of $22.14.

BTC Whale Transfers $940 Million Out of Coinbase — 3 Batches of ‘Sleeping Bitcoins’ From 2011 Move

October 19, 2022 Bitcoin.com

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