Journalist
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- Bitcoin miners are under some pressure, but the current market conditions can still be considered workable.
- Bitcoin miners’ reserves are more expensive compared to last year’s lows.
The state of Bitcoin mining often reflects how the network is performing, as well as the level of market activity at any given time. As such, examining how Bitcoin miners have fared could give a rough idea of the health of the network.
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CryptoQuant analyst Mignolet claimed that cost pressure was one of the biggest challenges Bitcoin miners faced. The claim is based on an analysis of Bitcoin’s miner position index (MPI). The same metric is used to indicate the pressures miners face in terms of cost pressures.
Source: Cryptoquant
The last MPI advantage (indicated by the blue square) highlighted the rising pressure on miners. However, it is not yet close to the red line where the market is considered overheated. It is in that zone that miners feel the pressure to sell their coins to cover their operating expenses.
Current market conditions continue to support miner profitability
Interestingly, the MPI has cooled down recently. This coincided with a sharp increase in miner earnings over the past ten days.
Source: Glassnode
The increase in miner earnings reflected the recently observed activity. Bitcoin’s price action may have dropped, but there’s still a lot of activity going on. Despite the above observation, the pressure miners faced was still evident in some statistics.
One of the best examples is Bitcoin’s miner reserve metric, which has shown some downside since the last week of August. In addition, it was worth noting that the outflow of miner reserves leveled off in early September.
Source: CryptoQuant
Note that Bitcoin miner reserves are still significantly higher than at their lowest level of the year so far in June. There is still a possibility that miners will be forced to sell if the selling pressure continues.
This is because miners are typically boosted to HODL when there is a bullish outlook. Another crash would send the market into a state of FUD, discouraging participation. The potential result would be low transactions, and therefore lower revenues for miners.
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A review of Bitcoin miner flows showed that both inflows, outflows and inflows returned to their monthly lows.
Source: CryptoQuant
The low Bitcoin miner flows can be explained by the current uncertainty. Miner revenues also fell, hence the lower inflow of miners. On the other hand, miners are still optimistic about the potential upside, especially after Bitcoin’s recent dip, hence the expectations of higher future prices that would bring more profit.
