Ki Young Ju, the creator of the cryptocurrency analytics website CryptoQuant, has released some intriguing profitability data for a variety of companies as Bitcoin halves and enters its fifth epoch in April. Ju used X to show the unrealized gains for various investment categories, revealing ancient whales as the overwhelming winner.
Bitcoin Pays Miners and Old Whales
Experienced Bitcoin investors, referred known as “old whales,” have witnessed an astounding 223% gain in unrealized earnings, per the statistics. This shows that their long-term holding strategy has been profitable, as their holdings have increased dramatically over the past few years due to growing prices.
Simultaneously, investors who are classified as “new whales” and who enter the market through exchange-traded funds (ETFs) and traditional finance (TradFi) have witnessed a more moderate increase in unrealized profits of 1.6%. Their reduced average cost basis and shorter investment period compared to elderly whales may be the cause of this.
DeFi gained momentum in early 2020 after surpassing the $1 billion threshold, and spot Bitcoin ETFs are becoming more popular, particularly in the US, following their approval by the Securities and Exchange Commission (SEC) in January 2024.
It’s interesting to note that both big mining firms like Marathon Digital and Riot Blockchain and individual miners have made some good profits. The unrealized gains of small miners, who are mostly sole proprietors or small businesses, increased by 131%.
Big miners, which are usually well-established mining firms listed on international stock exchanges, experienced an 81% rise in unrealized gains during this time. With the upcoming period anticipated to be more competitive, it is evident from this data that prices have been rising since October 2023.
Hash Rate: An Important Metric to Monitor After Halving
Drawing conclusions from this data, it becomes evident that early adopters stand to gain the most, riding the wave of growth over time. But miners in every category have also received substantial rewards.
However, it remains to be seen how miners modify their business practices to remain profitable and competitive. Large miners won’t be as heavily impacted by the hash rate decline in the coming days, but they will probably strengthen their positions anyway. In the meanwhile, small miners might be driven out, which would eventually cause a concentration of miners.
In the long term, the hash rate will be an important measure. Miners will be encouraged to invest in new equipment if prices rise as predicted, which will increase network security.
If not, a succession of difficulty adjustments will take place, further solidifying the grip of massive cryptocurrency mining farms, as seen by the price drops that followed the halving of Litecoin and Bitcoin Cash.
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Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.