"If they are liquidating [coins], they are liquidating them via OTC," said Tom Flake, founder of Bcause, a provider of mining facilities whose customers are institutional miners with hundreds to thousands of machines. The largest miners also sell their coins to sellers directly or through brokers.
One of the biggest reasons to buy coins outside of exchanges, though, is that there are often not as many coins offered for sale as the institutional buyers would like to buy, according to Sam Doctor, managing director and head of data science research at Fundstrat Global Advisers.
“At this point in time, because more and more institutions are beginning to enter the market, there’s more of an imbalance,” Doctor said. That’s why brokerage firms are springing up to help institutional buyers find inventory, he said.
What’s more, miners can offer something unique: brand-new, “virgin” coins, which some investors covet. Such coins command a premium of up to 20 percent, according to Travis Kling, founder of the hedge fund Ikigai. It’s easier to prove they’ve not been involved in money-laundering operations, he said.
This article was provided by Bloomberg News.