Key Points
- Bitcoin miner revenue has dropped to its lowest in a year due to a decrease in network activity.
- Bitcoin’s Miner Position Index (MPI) indicates a prolonged period of reduced miner sell pressure after a halving event.
Bitcoin’s miner revenue has seen a significant decrease, reaching its lowest point in the past year. This decline is attributed to a recent drop in network activity.
According to the Miner Position Index (MPI) for Bitcoin (BTC), the leading cryptocurrency is experiencing its longest period of reduced miner sell pressure following a halving event. This has been reported by a pseudonymous CryptoQuant analyst, Papi.
Understanding MPI and Its Implications
The MPI for Bitcoin measures the ratio of the coin’s total miner outflow in US dollars to its one-year moving average of total miner outflow, also valued in dollars. A rise in the MPI indicates an increase in miner selling, while a decline suggests miners are retaining their assets or accumulating more.
As per the data from CryptoQuant, the MPI for Bitcoin was -0.23 at the time of writing. This represents a significant drop from its year-to-date (YTD) high of 9.43 on the 8th of January.
Decline in Miner Revenue and Network Activity
In addition to the falling MPI, Bitcoin’s Puell Multiple, a metric tracking miner profitability, has also declined. This has resulted in miner revenue reaching its lowest point in a year. The Puell Multiple measures the daily issuance of new coins (block rewards) in relation to its 365-day moving average.
A high value of the Puell Multiple indicates that miners are generating revenue in relation to the historical average. Conversely, a decline in the metric indicates that miners’ revenue is lower compared to the historical average.
Post the Bitcoin halving event, there was a surge in average transaction fees on the network due to increased activity around Runes. However, as the excitement around the protocol began to fade, the transaction count on the network dropped, affecting network fees.
This decrease in network activity has resulted in a decline in the percentage of miner revenue derived from network fees. As per Messari’s data, on the 20th of April, miners derived 74% of their revenue from network fees. However, this figure dropped to only 22% on the 5th of May.
