- The success of the Bitcoin spot ETFs created a Bitcoin shortage.
- Bitcoin mining company Hut 8 was contacted directly by Wall Street banks interested in acquiring some of its Bitcoin.
- The upcoming halving will likely exacerbate supply issues.
The immense success of the Bitcoin spot exchange-traded funds is creating Bitcoin supply shortages.
Hut 8, one of the largest publicly traded Bitcoin mining companies in the US, told DL News that major banks recently contacted the firm to buy Bitcoin directly from the miner.
Fulfilling ETF hunger
Launched on January 11, Bitcoin spot ETFs have seen over $12 billion in inflows. In other words, more than 211,000 Bitcoin have been vacuumed up by ETF issuers and converted into shares.
This sudden demand created a shortage of Bitcoin on centralised exchanges, forcing banking institutions to contact at least one Bitcoin mining company to try to acquire the miner’s Bitcoin holdings.
“We’ve had banks reach out to us to try to buy our Bitcoin because of the supply shortages on these different exchanges,” Asher Genoot, CEO of Hut 8, told DL News.
Hut 8 is one of the largest publicly traded Bitcoin mining operations in the world. Its market capitalisation stands at almost $1.2 billion.
The mining company was contacted because of its enormous Bitcoin holdings, Genoot said.
Hut 8 holds almost $600 million in Bitcoin, which makes it the fourth-biggest holder of Bitcoin among publicly traded companies.
The size of its holdings is topped only by software developer MicroStrategy, rival mining company Marathon Digital, and car manufacturer Tesla.
The banks were interested in Hut 8′s holdings as well as its Bitcoin production capabilities, Genoot said.
While he refused to name any of the institutions, he said they were “the largest banks you can think of.”
While the ETFs have produced increased demand for Bitcoin, the upcoming halving, a network upgrade expected to occur on April 19, will slash in half the amount of new Bitcoin created by miners — potentially exacerbating supply shortage issues.
“The supply coming down by 50%, from 900 Bitcoin to 450 Bitcoin per day, also makes a big impact, because now you have increasing demand but less supply,” Genoot said.
“It’s a double whammy in terms of pushing Bitcoin’s price up,” he added.
Tom Carreras is a markets correspondent at DL News. Got a tip? Reach out at tcarreras@dlnews.com.
