As an experienced financial analyst, I’ve closely observed the Bitcoin mining industry for quite some time now. The latest halving event on April 19, 2023, has brought about significant changes in the market dynamics of this sector. According to recent data from CryptoQuant and Glassnode Academy, miner revenues have plummeted to their lowest point since early 2023, raising concerns about which firms will be able to survive the next halving epoch.
Bitcoin mining operators are currently experiencing revenue decreases akin to the early stages of 2023, making it an economically challenging time for them following the most recent halving event.
As a crypto investor, I’m constantly pondering over the potential implications of Bitcoin’s upcoming halving event. The shrinking profit margins for mining firms cast doubts on which companies will manage to survive this phase. Moreover, I wonder how the price of Bitcoin itself might be influenced by these circumstances.
Steep Decline In Miner Revenue
Based on the information provided by the on-chain analysis tool, CryptoQuant, I’ve noticed a significant decrease in Bitcoin’s “Puell Multiple” right after the halving event which occurred between April 19 and April 20.
As a financial analyst studying Bitcoin, I observe that the Puell Multiple is a valuable metric for assessing the market demand for newly mined coins relative to their production rate. Specifically, it calculates the ratio of the daily US dollar value of new BTC issuance against the moving average of this same value over the past year. With the reduction in new BTC issuance due to halving events, this metric has seen a decline from 6.25 BTC per block to 3.125 BTC per block, leading to a decrease in the Puell Multiple.
According to Glassnode Academy, a high Puell multiple signifies profitable mining conditions for miners, leading them to sell more coins to meet expenses. On the other hand, a low Puell multiple implies less profitable mining scenarios, causing some miners to shut down their operations and thereby increasing profitability for those who continue to mine, resulting in fewer coins being sold on the market.
I’ve analyzed the mining data up until April 28 and found that the mining reward to price ratio, or multiple, was a modest 0.73. This figure is significantly lower than the simple moving average of 1.43 over the past 365 days when expressed in USD terms. In simpler terms, the daily revenue generated from cryptocurrency mining was less than ideal relative to its value during the previous year.
“According to CryptoQuant CEO Ki Young Ju’s tweet on Tuesday, there are currently two possibilities: 1) giving in or surrendering, referred to as ‘capitulation’, and 2) holding out for an increase in $BTC price. However, at present, there is no clear indication of capitulation taking place.”
As a researcher studying market trends using CryptoQuant’s mining dashboard, I’ve observed that the outflow of Bitcoin (BTC) from miners to over-the-counter desks and exchanges remains relatively subdued. This suggests that miners are currently less inclined to sell their BTC holdings.
The Impact Of Runes
Despite a current decline in mining revenues, miners experienced significantly higher profits on the actual day of the halving, raking in approximately $106 million contrasted to around $68 million seen in prior days.
The significant increase in short-term profits can primarily be attributed to the concurrent introduction of Runes, a novel standard for generating tokens on Bitcoin, masterminded by Casey Rordamor, the brain behind Ordinals.
Users of the Rune platform were in a hurry to create new tokens, leading to exceptionally high Bitcoin network transaction fees surpassing $100. This situation benefited miners significantly, enabling them to mine multiple blocks yielding over 30 BTC in fee rewards. However, fees have since returned to typical levels, resulting in a miner revenue of approximately $28.5 million per day.
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2024-04-30 22:51