Bitcoin miners find relief as earnings rise to highest since June 2022

Data shows that Bitcoin miners have found some relief lately as their mining earnings have now shot up to the highest level since June 2022.

Mining revenues from Bitcoin have deviated significantly from annual averages

According to the latest weekly report from Glassnode, miners are now bringing in $22.6 million per day. The relevant indicator here is the “BTC miner earnings”, which measures the total amount of daily USD earnings that Bitcoin miners are currently earning.

The income of the miners here is defined as the block rewards that these chain validators receive for mining blocks, plus the transaction fees that they receive from individual transfers.

However, the average transaction fees on the BTC blockchain have for a long time remained at quite low values, due to the fact that the vast majority of the income of the miners is contributed by the block rewards alone.

While block rewards remain largely constant (until a halving occurs, where they are permanently cut in half), their USD value obviously fluctuates with the price of the asset. Miners are a cohort that has to pay ongoing operating expenses for their business (like utility bills), and since they make these payments in USD, dollar-converted earnings are what’s relevant to them.

Therefore, whenever the value of the miner income calculation drops low, miners may begin to struggle to make ends meet and may therefore be forced to sell their existing Bitcoin reserves to pay off operating costs or may even have to close their operations.

Now, here’s a chart showing the trend of Bitcoin miner earnings, as well as its 365-day simple moving average (SMA), over the past few years:

Looks like the value of the metric has been pretty high in recent days | Source: Glassnode's The Week Onchain - Week 12, 2023

As shown in the graph above, the daily Bitcoin miner earnings had plunged to quite low values ​​below its 365-day SMA last year when the bear market set in. However, with the rally this year, the indicator’s value has observed a new increase and has crossed over the annual average again.

And with the recent sharp rise of the cryptocurrency above the $28,000 level, the indicator has reached a value of $22.6 million per day, which means that miners are now earning the highest income since June 2022.

In the chart, Glassnode has also highlighted the trend in the indicator that has followed during the build-up to the latest bull rallies in the asset. It appears that the calculation has had large breaks above its annual average in recent years in three instances: May 2019, November 2020 and July 2021.

As is clearly visible in the graph, Bitcoin continued to see some major rallies after the formation of this pattern. The reason that increasing income from miners has a constructive effect on the market is that healthy mining economics mean that they are less likely to put selling pressure on the coin. They can also invest in expanding their facilities during such periods.

If this previous pattern in the indicator is anything to go by, the current break above the metric’s annual average could be a sign that the market is moving into a more bullish environment now.

BTC price

At the time of writing, Bitcoin is trading around $28,000, up 14% in the past week.

BTC has rebounded back above $28,000 | Source: BTCUSD on TradingView

Featured image from Dmitry Demidko at Unsplash.com, Charts from TradingView.com, Glassnode.com