Bitcoin Miners See Reduced Profits as Mining Difficulty Increases
Recently, the Bitcoin difficulty-adjusted puell multiple has remained below one, which could suggest ongoing pressure on BTC miners.
According to an analyst at Glassnode, miners currently earn approximately 12% less than the yearly average. The puell multiple is a key metric used to determine this, measuring the ratio between daily Bitcoin miner revenue (in USD) and the 365-day moving average of the same.
🧵/5. By adjusting the difficulty change, the Puell Multiple can show a more realistic estimation of contraction in miners' revenue. Investigating the Adjusted-Puell Multiple shows that miners are still earning 12% less than their yearly average income. pic.twitter.com/uMxTx0QNJX
— CryptoVizArt.₿ | ZiCast 🎙 (@CryptoVizArt) April 13, 2023
When the puell multiple is greater than one, miners are making more than their average for the past year, which is typically profitable for them. Conversely, values below this threshold imply that miner revenues are below the yearly average, which could mean miners are coming under pressure.
The puell multiple solely focuses on the cryptocurrency’s price and disregards mining difficulty. Mining difficulty is an inherent aspect of the Bitcoin blockchain, regulating the complexity of mining blocks on the network. The objective is maintaining a constant block production rate by adjusting the mining difficulty.
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As the hashrate goes up, miners can hash blocks faster, decreasing individual miner revenues due to the fixed block rewards.
Therefore, the “difficulty-adjusted puell multiple” is a modified version of the indicator that provides a more accurate representation of the miners’ situation as it accounts for mining difficulty.
Although the regular puell multiple crossed above the one mark earlier this year when the ongoing rally in Bitcoin’s price started, the difficulty-adjusted version remains below one, indicating that miners are making 12% less than the yearly average.
However, this is not as severe as during the bear market lows.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
