Supply Crisis Nears As Square Sells BTC Faster Than Mining It

A supply crisis for bitcoin could come soon as Square started selling bitcoin faster than it is possible to be mined as we are reading more in the latest bitcoin news today.

Figures from Square, Grayscale and PayPal shows that the consumer demand for bitcoin turned ravenous, outstripping a new supply from mining income. Square reported record Q3 BTC sales, generating $1.6 billion in revenue so many analysts wonder if a supply crisis is upcoming as Square sells BTC faster than it is mined. The number of BTC sold by Square in Q3 2020 is about to double the number mined over the same period.

One analyst predicts a looming “supply crisis” as demand for BTC intensifies. Square sold a record of 160,000 BTC in Q3 this year and as it stands, the consumer demand for BTC outstrips new supply from mining. The US is in the middle of a BTC boom during the financial services companies. The investment funds and payment providers that offer BTC are selling record quantities. For example, the financial services company Square generated $1.6 billion in BTC revenues in the third quarter up by 11x from last year from the mobile payments CashApp.

Investment funds are buying and holding BTC in huge quantities as Grayscale added 40,000 BTC to its balance sheet in October which is much more than the 27,000 BTC which were mined during the same month. More recently, payments giant PayPal enabled BTC purchases from their accounts. Right after adding the feature, CEO Dan Schulman raised buying limits for the crypto asset after seeing that the demand was “Two times to three times of what our expectations were.”

This is huge.

Square is selling double the Bitcoin that is made.

…and now Paypal is doing the same.

Paypal is almost 3X Square. We already know Grayscale is consuming a similar magnitude.

This is a Bitcoin supply crisis.

Base case: expect huge price moves from #Bitcoin. pic.twitter.com/dGygJKZiW8

— Charles Edwards (@caprioleio) November 6, 2020

As a result, the crypto industry could be facing a supply crisis according to Charles Edwards who is the founder of Capriole Investments. He argued that companies like Grayscale and Square are facing demand which surpasses the number of miner BTC. He pointed to the fact that 163,000 BTC sold by Square in Q3 2020 was double the amount that was mined during the same timeframe. The good news is that if there’s a supply crisis, it will be great for the investors. According to experts like Edwards, the overwhelming demand along with the lack of supply will be favorable for BTC prices that are increasing. The price of BTC has almost doubled in 2020 alone from $7900 to more than $15,400 at press time.