- BTCs miner income from fees has fallen to a three-month low.
- BTC miners refuse to sell their coins as the Exchange to Miner indicator grows.
Sitting at 2.61% at the time of writing, the percentage of miners’ revenue comes from fees paid to use the Bitcoin [BTC] network fell to its lowest level in the past three months, data from Messari showed.
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The decline in BTC mining fee income in recent months was due to the steady decline in transaction fees paid to use the network, despite the surge in transaction volume on the Layer 1 (L1) network.
According to on-chain data provider IntoTheBlocktotal fees paid to process transactions on the Bitcoin network have fallen 38% since March to a four-month low.
#Bitcoin rates fell to their lowest level since March, despite the recovery in transaction activity pic.twitter.com/xT9VMYoXOP
— IntoTheBlock (@intotheblock) July 14, 2023
There was once…
According to Messari data, the value of the average fee paid per transaction on the Bitcoin network rose to a high of $30.36 on May 8, the highest daily fee in the past year.
Source: Messari
The increase in transaction costs was due to an increase in trading volume on the Bitcoin network when the hype was around Ordinal numbers NFTs collection flooded the market. According to data from Glassnode, an average of nearly 600,500 daily transactions were recorded in May, driving up the cost of using the network.
Source: Glassnode
When Bitcoin’s average transaction fees hit a one-year high on May 8, the percentage of miner income from fees also rose to 33%, the highest in five years.
However, as the craze of the Ordinals died down, transaction activity returned to normal, lowering transaction costs. Consequently, the percentage of miner income from fees also declined.
Source: Messari
Miners say “no” to letting their bags go, but here’s the catch
This is reported by the pseudonymous CryptoQuant analyst Tarekon chainA review of BTC’s Exchange to Miners indicator revealed that while mining revenue from fees may have taken a hit in recent months, miners on the L1 network have refused to sell their BTC holdings.
Source: CryptoQuant
The Exchange to Miners indicator tracks the flow of cryptocurrency from miners to exchanges. When this rises, it suggests increased BTC accumulation by miners on the Bitcoin network.
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Tarekonchain commented:
“The pronounced spike in the Exchange to Miners Indicator suggests that miners are actively accumulating Bitcoin and choosing to hold onto their assets rather than quickly converting them back to stablecoins or fiat currencies.”
On what this means for the general market, Tarekonchain concluded:
“The preference of miners to hold Bitcoin in their wallets may represent positive long-term sentiment regarding Bitcoin’s future value. It reflects the belief among miners that holding on to Bitcoin could yield more profitability over time.
However, it is important to pay attention to Bitcoin’s Puell Multiple indicator. This indicator provides insight into the profitability of mining operations and helps identify potential turning points in the cryptocurrency market.
When the Puell Multiple climbs to a high value, it suggests that mining revenues are relatively high compared to the long-term average. This situation often indicates that miners have a strong incentive to sell their newly mined BTC, potentially increasing the selling pressure in the market. On the other hand, a low Puell Multiple indicates that mining revenues are relatively low compared to the historical average, which can discourage miners from selling and potentially lead to a decrease in selling pressure.
This is reported by analyst CryptoQuant Joao Wedson:
“The Puell Multiple recently reached a long-term trendline dating back to 2017. It is interesting to note that in 2021, when the price rose after the indicator reached resistance, another downtrend occurred, marking the end of the bullish cycle .”
Source: CryptoQuant