On-chain data shows that bitcoin mining revenue has approached its annual average, a sign that capitulation may be coming to an end for miners.
bitcoin miner revenue is now close to its 365-day SMA
In a new x.com/jvs_btc/status/1815411761061003752″ target=”_blank” rel=”noopener nofollow”>mail At x, analyst James Van Straten has talked about what the situation for btc miners looks like right now. There are different ways to measure the condition of miners, one of the most popular being hashrate, which is a measure of the total computing power connected to the bitcoin network.
However, in this case, the analyst has made use of the total daily revenue of these chain validators. Miners' revenue is divided into two parts: the block subsidy and the transaction fees.
The first refers to the btc rewards miners receive as compensation for solving blocks on the network, while the second is the payment users receive from individual transactions. Historically, the block subsidy has accounted for a much more significant portion of miners' revenue than transaction fees.
The chart below shows how the combined revenue of bitcoin miners has changed over the past few years.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/07/Bitcoin-Miners39-Capitulation-Is-Almost-Complete-Is-This-a-Sign.jpeg" alt="bitcoin Miners' Income” width=”1800″ height=”1013″/>
The value of the metric appears to have registered a sharp drop in recent months | Source: x.com/jvs_btc/status/1815411761061003752/photo/1" target="_blank" rel="noopener nofollow">@jvs_btc on x
As shown in the chart above, bitcoin miner revenue had started to rise alongside the price rally that began in October last year and had reached a new all-time high (ATH) in April this year.
This increase has occurred for two reasons. First, the block subsidy, which is awarded in btc, is usually fixed in both value and periodicity, so the only variable related to it is the asset's price in dollars. Therefore, it makes sense that revenue increases when the price rises.
At the same time, the network also became flooded with traffic due to the rise of the bull market. The transaction fee depends on the conditions of the blockchain, as there is only limited space available in the blocks. This space naturally becomes more expensive as competition for transfers increases.
The increase in ATH revenue, in particular, was driven by the arrival of Runes, which is a new on-chain technology that allows users to mint fungible tokens. Runes-related transactions are similar to any other on the network, so they also impact the network’s economics.
From the chart, it can be seen that miner revenue had seen a sharp drop right after this ATH, with its value sinking below the 365-day simple moving average (SMA).
The reason behind this was the fourth Halving. While block rewards remain fixed in value for most of the time, there is an exception in the form of Halving events. These periodic events, which occur every four years, permanently cut these rewards in half, drastically affecting miners’ income.
Since this drop, bitcoin mining revenue has remained below the 365-day simple moving average (SMA), putting many miners under pressure and forcing some of them to capitulate.
However, with the latest recovery, miners' revenues have increased to $35 million, which is not far from the annual average of $40 million. “This is another way of showing that the capitulation of the miners is about to end,” explains Van Straten.
If the metric manages to reclaim the 365-day simple moving average (SMA), then bitcoin could continue its uptrend, according to the analyst.
btc Price
bitcoin has stalled in its recovery as its price is still trading around the $66,200 level.
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Looks like the price of the asset has slumped to sideways movement over the last few days | Source: BTCUSD on TradingView
Featured image by Dall-E, Glassnode.com, chart by TradingView.com
