Disclaimer: Your capital is at risk. This is not investment advice.
We can measure miner inventories by looking at the difference between the number of coins generated over a period and those spent. This is calculated using the following formula:
Change in miner inventory = bitcoins generated - bitcoins first spent
We track the generated and First Spend numbers on the ByteTree Terminal each time a new block is added to the blockchain. In the example below, the change in miner inventory for that period is around -52 BTC or the equivalent of -$550k of inventory decrease.
In the “Supply” section, we track the change in inventory over different periods for trend analysis. In the example below, we can see that miners offloaded a large portion of their inventory over the last week; -1,400 BTC or the equivalent of $1.4MM.
The relationship between generation and first spend is also monitored on the graph below. The lines show the cumulative 7-day total of first spend and generation. As mentioned, the generation refers to the network’s natural inflation rate and is currently around 4% PA. The difference between the two lines demonstrates the change in inventory over that period, so leveraging the previous chart, the difference between the 1-week baseline Generation and the 1-week miner’s First Spend is approximately -1,400 BTC:
Look out for our upcoming posts on how miners manage their inventories with respect to price, as well as an insight into how inventory management is a proxy for change in network value.