On-chain data shows that Bitcoin mining revenue has approached its yearly average, a sign that capitulation time for miners is drawing closer.
Bitcoin miner revenue is now close to its 365-day SMA
a new Post Over on X, analyst James van Straten discusses what the state of BTC miners looks like right now. There are different ways to assess the state of miners, with one popular way being the hashrate, which is a measure of the total computing power connected to the Bitcoin network.
However, here the analyst has used the daily total revenue of on-chain validators. Miner revenue has two parts: block subsidy and transaction fees.
The first of these refers to the BTC rewards that miners receive as compensation for solving blocks on the network, while the second bundles the payments users make with individual transactions. Historically, block subsidies have made up a much larger portion of miner revenue than transaction fees.
The chart below shows how combined bitcoin miner revenue has changed over the past few years.
The value of the metric appears to have registered a sharp drop in recent months | Source: @jvs_btc on X
As shown in the graph above, Bitcoin miner revenue began to grow alongside the price increase in October last year and had achieved a new all-time high (ATH) by April this year.
This increase was due to two reasons. First, the block subsidy, which is paid in BTC, is typically fixed in both value and periodicity, so the only variable relating to it is the USD price of the asset. Thus, it makes sense that revenue would increase when the price rises.
At the same time, the network also became busier as the bull market traffic increased. Transaction fees depend on the conditions of the blockchain, as there is only a limited amount of space available in a block. This space naturally becomes more expensive as competition for transfers increases.
The surge in ATH revenue was, in particular, driven by the arrival of Runes, a new technology on the chain that allows users to create fungible tokens. Transactions related to Runes are the same as any other on the network, so they also impact network economics.
It is clear from the chart that miner revenue recorded a sharp decline right after this ATH, and its value dropped below the 365-day simple moving average (SMA).
The reason behind this was the fourth halving. While block rewards remain stable in value 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, causing a massive drop in miner revenue.
Since this drop, Bitcoin mining revenue has remained below the 365-day SMA, putting many miners under pressure and forcing some of them to capitulate.
However, with the latest correction, miners’ revenue has risen to $35 million, which is not far from the $40 million annual average. “This is another way to show that miner capitulation is almost over,” explains van Straten.
According to the analyst, Bitcoin could continue its bullish trend if the metric manages to reclaim the 365-day SMA.
BTC Price
Bitcoin’s recovery has stalled as its price is still trading around $66,200.
Looks like the price of the asset has slumped to sideways movement over the last few days | Source: BTCUSD on TradingView
Featured image Dall-E from Glassnode.com, chart from TradingView.com
