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 website 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 generated 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 1wk baseline generation and the 1wk miner’s 1st 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.