Bitcoin Miners Hold On To Their Coins Despite Low Profitability — Details

According to the latest on-chain data, Bitcoin miners refuse to offload their BTC holdings despite profitability being historically low. BTC Transaction Fees At Lowest Level Since 2012 In a new post on X, blockchain analytics firm Alphractal revealed that Bitcoin miners are still holding on to their reserves despite the decline in revenue. The on-chain data platform discussed the reasons behind this trend and its potential implications on the BTC mining industry. Firstly, Alphractal highlighted low on-chain activity in this cycle as one of the reasons behind the significant decline in miner revenues. As a result of the reduced activity, the total transaction fees paid on the Bitcoin network have dropped to their lowest levels since 2012. The market intelligence platform also mentioned that the mining difficulty has remained high even though the hash rate recently witnessed a drop. Typically, there is a direct relationship or positive correlation between the hashrate and mining difficulty. However, according to Alphractal, this recent lag or dissociation further strains miner profitability and delays network equilibrium. Furthermore, Alphractal revealed on X that the Bitcoin hash rate volatility has reached new all-time highs. This basically implies that the network is witnessing the highest hash rate fluctuations or changes in its history. The blockchain analytics firm added: This is likely caused by large mining operations shutting down ASIC machines, possibly due to falling revenues and low network demand. Despite the network revenues and the high mining difficulty, selling pressure from miners has remained at low levels. As exhibited by the low Miner Sell Pressure metric, this indicates that miners are not aggressively offloading their holdings for profit. Alphractal admitted that the low selling pressure from miners is a positive sign, especially for the price of Bitcoin. The blockchain firm noted the possibility of some mining pools scaling down their operations in response to the decreased activity on the Bitcoin network. “As BTC trades above $107K, we may simply be witnessing miners reallocating their hash power to adapt to the current demand,” Alphractal added. Typically, BTC miners tend to sell their coins for profit during periods of rapid price increases and high blockchain activity. However, Alphractal believes the current absence of both suggests a period of adjustment rather than capitulation amongst the miners. Bitcoin Price At A Glance As of this writing, BTC is valued at around $107,375, continuing its sideways movement with a mere 0.3% increase in the past 24 hours.

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On-chain data suggests the Bitcoin miners have recently been the most underpaid in around a year, as daily revenue hits a $34 million low. Bitcoin Miner Revenue Has Observed A Plummet According to data from the on-chain analytics firm CryptoQuant, the margins of the Bitcoin miners have recently taken a notable hit. Miners earn their revenue through two sources: block subsidy and transaction fees. The first component, the block subsidy, refers to the reward that these chain validators receive as compensation for adding a block to the chain. The network gives out this reward as a fixed BTC-denominated amount. Due to the existence of a feature known as the difficulty, miners are only able to add blocks at a more or less fixed rate of time, which adds another constraint to the block subsidy. If speed and amount are fixed, that leaves only one variable related to this reward: the Bitcoin spot price. Changes in the price directly affect miners’ income from the block subsidy. The other component of miner revenue, the transaction fees, is connected to the level of activity that BTC is observing. Investors attach these fees to their transfers as a small payment for the validators. In times when the network isn’t handling any notable traffic, senders have little incentive to pay any significant amounts, as chances are that their transfers will go through quickly anyway. When there is congestion present, however, transactions can get stuck in the mempool for a while. During such periods, investors who want their moves to go through fast have no choice but to outcompete the other users in transfer fees. As such, the total transaction fees being received by the miners tend to spike during times of high activity. Now, here is the chart shared by CryptoQuant that shows the trend in the two components of Bitcoin miner revenue over the past year: As displayed in the left graph, the combined daily revenue of the Bitcoin miners has recently gone through a plunge. “Falling fees and Bitcoin’s price drop are crushing margins,” notes the analytics firm. During the price low earlier, the metric reached a low of $34 million, which is the lowest that its value has been since April 10th. This comparison, however, doesn’t accurately portray how bad the current situation is for the miners. The chart on the right shows the data of the Miner Profit/Loss Sustainability, a model that compares the miners’ revenue against the difficulty to determine how fairly paid the group is. From the indicator’s trend, it’s apparent that the recent low in mining revenue corresponded to miners being the most underpaid since July 2024. BTC Price At the time of writing, Bitcoin is floating around $107,000, up over 2% in the last seven days.