Data shows that bitcoin miners’ revenues have been coming under stress recently as they are now down 61% from last year’s average.
Bitcoin Miner Revenue Comes Under Pressure as Pull Multiple Sharp Drops
According to the latest weekly report from Glassnode, the miner earnings contraction is higher right now than the Great Migration of May-July 2021.
The “pull multiple” is an indicator that measures the ratio between daily bitcoin miner earnings in USD to the 365-day moving average of the same.
When the value of this metric is high, it means that the miner’s income is currently higher than the previous year’s average.
During such periods, miners may choose to sell some of their reserves to expand their mining rig capacity and take advantage of the existing high profitability.
On the other hand, low values of the ratio indicate that the daily coin issuance is lower than the current annual average.
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Some miners may react to such low income periods by turning their machines offline to save on electricity costs.
Now, here’s a chart that shows the trend in the bitcoin pull multiple over the years:
The value of the indicator looks to have dropped down recently | Source: Glassnode's The Week Onchain - Week 25, 2022
As you can see in the above graph, the bitcoin pull multiple has seen some sharp decline in value in recent days, indicating that miners are facing revenue strain.
Right now, the value of the metric shows that miners are earning 61% less than the average of the past 365 days.
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The chart also includes data for another indicator, Difficulty Ribbon Compression. This metric tells us how mining difficulty is changing right now.
This indicator indicates that the cost of bitcoin production has recently risen, providing further evidence for shrinking miners’ revenues.
Current miner income tensions have already been crossed during the Great Migration in May-July 2021, where China’s mining embargo forced miners out of the country.
The revenue contraction is even worse than it was during the COVID-19 crash, but the conditions for bitcoin miners were still bad in the bear markets of 2014-15 and 2018-19.
At the time of writing, the price of bitcoin is down 4% in the past seven days to around $21k. In the past month, the crypto has lost 28% in value.
The chart below shows the coin’s price trend over the past five days.
Looks like the value of the crypto has been climbing up over the last few days | Source: BTCUSD on TradingView
Featured image from Mariia Shalabaieva on Unsplash.com, charts from TradingView.com, Glassnode.com