What’s Lifetime Profit Of Bitcoin Miners?
Data from on-chain analytics firm Glassnode has revealed the all-time aggregate profit margin for Bitcoin miners; here’s what it is.
Bitcoin miners made a 37% profit on their total investment
In a recent tweet, glassnode published the latest data on the current situation of miners regarding revenue, cost and profit. First, to calculate the income from these chain validators, the analytics firm took the sum of the “thermocap” and transaction fees this cohort earned over its lifetime.
The thermocap is an indicator that measures the cumulative sum of issuance multiplied by the spot price of Bitcoin. In simpler terms, this metric tells us the total amount of block rewards that miners have earned over the lifetime of the network.
To find the costs incurred by this group, Glassnode used their “difficulty regression model”. This is a model for finding the cost of producing Bitcoin and it is based on “mining difficulty”.
Mining difficulty is a feature of the BTC blockchain that controls how difficult miners find it to mine on the network. This concept exists because the chain wants to keep its block production rate (the speed at which miners hash blocks) at a constant value.
Whenever the computing power connected by miners (the “hashrate“) changes, your ability to mine naturally changes with it. For example, miners can perform their tasks faster if they connect more machines to the network.
However, as already mentioned, the network doesn’t want miners to become faster (or slower) than the default rate, so it adjusts the difficulty to counteract this change. In the case of this example, the chain’s difficulty would increase in response, slowing the miners back to the desired speed.
The difficulty regression model assumes that difficulty encapsulates all the costs that miners have to pay, as it is directly related to the amount of computing power that these validators have connected to the network.
Now, here’s a graph that shows what the cumulative miner revenue and cumulative production cost of Bitcoin miners looks like right now:
The costs, revenues, and the profits of the miners | Source: Glassnode on Twitter
As displayed in the chart above, Bitcoin miners have raked in lifetime revenues of around $50.2 billion, while their cumulative production cost is around $36.6 billion.
Revenues were greater than costs for this group, meaning BTC miners made some gains. In numbers, miners earned aggregate profits of $13.6 billion. This value represents a gain of 37% in the investments of these chain validators.
BTC price
At the time of writing, Bitcoin is trading around $28,700, up 4% over the last week.
Looks like the value of the asset has surged in the past day | Source: BTCUSD on TradingView
Featured Image by Brian Wangenheim at Unsplash.com, Charts by TradingView.com, Glassnode.com