With Bitcoin’s price rising steadily since the start of the year, Bitcoin miners’ profitability has also increased substantially. After last year’s dismal performance, where Bitcoin (BTC) seemed to never stop falling, and energy prices continued to skyrocket, BTC miners can now breathe a sigh of relief. Or at least that’s what most expect within the crypto industry.
Bitcoin mining: puell multiple ratio
Contrary to expectations, miners are still under a lot of pressure, as pointed out by a researcher at crypto analysis company Glassnode via a tweet .
“The indicator that matters here is the ‘puell multiple ratio,’ which measures the ratio between daily miner revenues (in US dollars) and its 365-day moving average. When this statistic’s value is greater than one, it means that miners are earning more than the average of the past year. During these periods, miners often find their work profitable. Logically, a value below one means that miners’ income is below the yearly average, implying that the group is under pressure.”
Currently, this indicator has a value of 1.2, which suggests that miners are earning more than the average of the past 365 days.
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However, the problem with this statistic is that it doesn’t factor in the mining process’s difficulty. The mining difficulty is adjusted every 20,016 blocks, which is approximately two weeks, to the network’s hashrate to ensure that block production speed remains constant at around ten minutes.
A rising hashrate, or the network’s total computing power, indicates more competition, so the difficulty must be adjusted upwards to prevent blocks being added to the blockchain too quickly.
BTC miners still under pressure
Last week, it was reported that mining difficulty had hit its fourth all-time high this year. When considering the difficulty in the aforementioned ratio, the value drops to 0.88. This means that currently, miners are earning 12% less than the yearly average.
However, the current pressure is not as severe as during the bear market’s depths in 2022.