Bitcoin Miners Hold Despite Drop in Earnings, Bolstering Market Stability

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The Essentials at a Glance

In recent months, Bitcoin miners have held onto their holdings despite a decline in their revenues, choosing not to sell. This phenomenon can be explained by various indicators and market developments. A deeper look into the Miner Position Index (MPI) and the Puell Multiple shows why miners are currently keeping their Bitcoins and what this means for the market.

Understanding Miner Behaviour

The revenues of Bitcoin miners have fallen to the lowest level of the past year, largely due to a decline in network activity. The Miner Position Index (MPI), which measures the ratio of total miner outflow in US dollars to its one-year average value, currently shows a significant reluctance of miners to sell their holdings. A negative MPI value, like the current one of -0.23, suggests that miners are holding or even accumulating more of their holdings rather than selling.

Influence on Miner Revenues

Another important indicator, the Puell Multiple, measures the profitability of miners by considering the daily issuance of new coins (block rewards) in relation to their 365-day average. A low value, like the current one of 0.69, signals that miners’ revenues are low compared to the historical average. This decline in miner revenues is partly due to the waning hype around the Runes protocol and the resulting reduction in network fees.

The Impact on the Network

The average transaction fee in the Bitcoin network, which had temporarily risen to $40 due to increased activity around the Runes protocol, has now fallen to $6. This decrease in network fees has led to the proportion of miner revenues from transaction fees falling from 74% to 22%. This development shows how strongly network activity and the associated fees can influence miner revenues.

Our Assessment

The decision of Bitcoin miners to hold onto their holdings despite falling revenues suggests long-term confidence in the value of Bitcoin. This behaviour could be a positive indicator for the stability and future growth of the Bitcoin market. However, it is important to continue to monitor developments around network activity and miner revenues to gain a comprehensive understanding of the market.

Sources

– CryptoQuant
– The Block
– Messari

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