Bitcoin [BTC] traded toward the $65,000 price level, having gained over 3% in the past 24 hours. The hash rate, on the other hand, is declining as Bitcoin miners continue moving into AI infrastructure.
How will the mining economics affect the current and future prices of Bitcoin?
Bitcoin miner revenue stressed as hash rate declines
Looking at the Puell Multiple, BTC miner stress is building, but miners remain adamant about selling.
The Puell Multiple has slipped below the 1 mark, with the reading at 0.71, slightly above the accumulation zone. Historically, the accumulation zone marks a tight revenue stress for miners, as it reflects the supply side of the Bitcoin economy.
Moreover, Hash Ribbons have printed yet another capitulation band as hashrate fades from its peak. Over the past year, hashrate has dropped from 1,106,922,137 TH/s last November to 995,460,294 TH/s.
Furthermore, Bitcoin mining difficulty has dropped another 5% to 127.17T, which is nearly 17% below the peak of 148.26T seen at the beginning of the year. This indicates miners are getting relief, but it does reduce the network’s security.
With difficulty reducing, a solo miner found a Bitcoin block and earned a full 3.1382 BTC reward worth about $200K. This was somehow luck, as the probability of finding a block with 1 TH/s was roughly 1 in 16,000 years.
Miner reserve flows ticking up...accumulation underway?
With that in mind, miner flows were ticking up as per CryptoQuant. That is, inflows outweighed outflows, though by a small margin.
The data showed miner reserves held 1.1943 million BTC, equivalent to $76.76 billion. This was a 1% increase, representing a net flow of more than 224 BTC. This data shows accumulation, as BTC is currently undervalued.
From the data, it is clear that miners’ wallets are full and distribution has not yet started. The data indicates a supply overhang that is yet to be triggered.
Looking ahead, if miner reserves start bleeding while The Puell Multiple stays depressed, there will be forced selling.
How BTC be affected?
But since the reserves are not bleeding, the price of BTC is showing signs of recovery. It has broken above the neckline of an inverted head-and-shoulders pattern, but the signal is only valid if it can stay above it.
Otherwise, a break below the neckline alongside miner selling would exert more pressure, curtailing the little recovery seen.
Final Summary
- Bitcoin miners are seeing a decline in revenue, but they continue accumulating, with their reserves growing by 1%.
- BTC price has seen a slight recovery due to accumulation, breaking above the neckline of a bullish reversal pattern.
