Bitcoin Mining
Bitcoin miners now face higher BTC electrical costs than the “Miner Price” indicator, on-chain data shows. Here’s what happened next.
Charles Edwards, the founder of Capriole Investments, has brought attention to a recent development regarding the circumstances facing Bitcoin miners in a new article on X.
The electrical cost and the miner price are the two pertinent indications in this case. The first calculates the total cost of electricity bills that miners must pay each day to mine one bitcoin.
The revenue that one Bitcoin brings in for the miners is tracked by the second one, the miner price. The two ways that this cohort gets paid for mining are through transaction fees and block rewards.
The former’s value is solely based on the price of cryptocurrencies because it is distributed in Bitcoin at a roughly consistent rate. As a result, the miners’ total revenue would be increased by a single token from the block rewards, valued at the current spot price.
Transaction fees are more complex to understand than they are based on the volume of traffic that passes through the network. When there is little activity, the costs usually remain low because customers have little reason to attach large amounts.
However, because there is a limited capacity to handle transfers, the network only prioritizes high-fee transactions during moments of congestion. Therefore, if senders want their moves to be processed relatively quickly, they are forced to pay a small price.
It would be necessary to pay the transaction fees related to one token because the Miner Price takes into account the entire revenue generated by just one Bitcoin. Edwards’ measure is calculated by dividing the transaction fees by the total amount of Bitcoin being mined.
This is because transaction fees—which are the sum that the transactions included in the block had paid out to the network—are only distributed by the Bitcoin network in conjunction with block rewards when miners add the subsequent block to the chain.
Therefore, it is reasonable to conclude that this fee revenue is related to the 3.125 BTC that is now awarded in block rewards along with them. Therefore, the revenue linked to a single 1 BTC would be calculated by dividing the fees by this amount.
This graph, which spans the last ten years, illustrates the trend in the price of miners and the electrical cost of Bitcoin.
The graph indicates that miners aren’t earning enough money from 1 BTC to cover the electricity expenses required to mine it, as seen by the recent fall in the price of Bitcoin miners relative to the cost of electricity.
The analyst has shown the prior occurrences of this unusual trend on the chart. Every time the miners experience such hardship, the cryptocurrency’s price has seen some sudden bullish momentum.
Since Bitcoin has again seen this trend, it is now unclear how the asset will behave going forward.
After briefly rising beyond $66,000, the price of Bitcoin now hovers around $64,800, suggesting that part of the asset’s recovery has been reversed.
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