Bitcoin Miners Find Relief As Revenues Spike To Highest Since June 2022
Data shows that Bitcoin miners have found some relief recently as their mining revenue has skyrocketed to the highest level since June 2022.
Bitcoin mining revenues significantly deviated from annual average
According to Glassnode’s latest weekly report, miners are pulling in $22.6 million a day. The relevant indicator here is “BTC miner revenue”, which measures the total amount of daily dollar revenue that Bitcoin miners are currently earning.
Miner income here is defined as the block rewards these chain validators are receiving for mining blocks, plus the transaction fees they are receiving from individual transfers.
However, for a long time, average transaction fees on the BTC blockchain have remained at rather low values, due to which the vast majority of miners’ income is contributed only by block rewards.
While block rewards remain virtually constant (until a halving arrives, where they are permanently halved), their dollar value obviously fluctuates with the price of the asset. Miners are a group that have to pay ongoing expenses of their operations (such as electricity bills) and since they make these payments in dollars, the revenue converted into dollars is what is relevant to them.
Therefore, whenever the value of the miner revenue metric drops, miners may start to struggle to survive and therefore may be forced to sell their existing Bitcoin reserves to pay their operating costs or may even have to close their operations.
Now, here’s a graph that shows the trend of Bitcoin miner revenue, as well as its 365-day simple moving average (SMA), over the last few years:
Looks like the value of the metric has been pretty high in recent days | Source: Glassnode's The Week Onchain - Week 12, 2023
As shown in the chart above, daily Bitcoin miner revenue has dropped to well below its 365-day SMA last year as the bear market began. crossed above its annual average again.
And with the last sharp rise of the cryptocurrency above the $28,000 level, the indicator reached a value of $22.6 million per day, which means that miners are earning the highest income since June 2022.
On the chart, Glassnode also highlighted the trend in the indicator that followed during the run-up to the last bull rallies in the asset. It appears that the metric has had large breaks above its annual average over the past few years in three instances: May 2019, November 2020 and July 2021.
As is clearly visible from the chart, Bitcoin went on to see some major rallies after this pattern formed. The reason rising miners’ revenues have a constructive effect on the market is that miners’ healthy finances mean they are less likely to put selling pressure on the currency. They can also invest in expanding their facilities during these periods.
If this previous pattern in the indicator is anything to go by, the current break above the metric’s annual average could be a sign that the market is transitioning to a more bullish environment now.
BTC price
At the time of writing, Bitcoin is trading around $28,000, up 14% over the last week.
BTC has rebounded back above $28,000 | Source: BTCUSD on TradingView
Featured Image of Dmitry Demidko at Unsplash.com, Charts by TradingView.com, Glassnode.com