Bitcoin has been able to successfully set new ATHs lately, with its price corrections generally followed by strong bouncebacks. The last 7 days saw something similar, with BTC falling below $55k before recovering most of its losses to trade around $58k, at press time, not too far away from its current ATH.
While Bitcoin’s recent price exploits have been quite significant, it is also important to see how a key demographic within the BTC ecosystem has reacted to this price surge.
Miners back the coin and cover up the weakest links. Such is the case with Bitcoin as well. While investor confidence and a surging price is a key aspect of the coin, poor network security can undo all the hard work of the past decade. This makes Bitcoin’s miner community an extremely significant part of the coin’s long-term prospects.
Interestingly, many small/mid-sized mining operations were put at risk last year after the coin underwent its 3rd block reward halving. However, the narrative seems to have changed drastically since. With the price surging, miners have also found respite. A day ago, it was reported that miners were seeing record-breaking revenues from both block rewards and transaction fees. In fact, per-day revenue for Bitcoin miners hit a whopping $63 million on 15 March.
Further, a recent report by Glassnode highlighted two interesting developments with respect to Bitcoin’s miners. The first was the surging revenue miners are now receiving and the second was the increase in transaction fees.
While 2020’s halving posed questions regarding the sustainability of small and medium-sized mining operations, 2021’s price seems to have come as a relief. However, BTC has also been seeing a spike in transaction fees and network data suggests that global transaction fees related to exchanges account for around 30% of on-chain transaction fees.
While miners are no longer on the edge on the question of sustainability, it is also interesting to look at what miners are doing with their revenue and whether or not they are hodling their Bitcoins. Strong hodling sentiments among the coin’s miners have always been a key way of understanding whether the coin is enduring a sell-off and how the price will react in the near term.
Glassnode’s data suggested that miners to exchange flow (7d MA) reached a 1-month low of 10.684 BTC. This implied that one, miners aren’t selling their earnings and two, that they have substantial revenue, making their operations profitable and adding to the overall security of the network.
With Bitcoin continuing to trade around the $60k-price range, miners backing the coin may be the deciding factor that spurs the coin towards more price discovery past its latest ATH. In addition to this, BTC has seen a substantial surge in investment from traditional and institutional investors over the past few months, and strong miner confidence implies that its weakest links with regard to the resilience of the network are covered and secure.
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