Data from on-chain analytics firm Glassnode reveals Bitcoin miner gross profit margins to date. Here it is.
Bitcoin miners made a profit of 37% of their total investment
In a recent tweet, glass node We have posted the latest data on where miners currently stand in terms of revenue, costs and profits. First, to calculate the earnings of these chain validators, the analytics firm took a “thermocap” and the total transaction fees earned by this cohort over their lifetime.
Thermocap is a metric that measures the cumulative issuance multiplied by the spot price of Bitcoin. Simply put, this metric shows the total value of block rewards earned by miners over the lifetime of the network.
To find the cost incurred by this group, Glassnode used a “difficulty regression model”. This is a model for determining the production cost of Bitcoin, based on “mining difficulty”.
Mining difficulty is a feature of the BTC blockchain that controls how difficult it is for miners to mine on the network. Such a concept exists because the chain wants to keep the block production rate (the speed at which miners hash blocks) at a constant value.
Whenever the computational power (“hashrate”) attached by miners changes, the mining power naturally changes as well. For example, miners can perform their tasks faster when more machines are connected to the network.
However, as already mentioned, the network doesn’t want miners to go faster (or slower) than standard speed, so it adjusts the difficulty to neutralize this change. For this example, the chain difficulty increases accordingly, slowing the miner down and back to the desired speed.
The difficulty regression model assumes that difficulty encapsulates all costs that miners have to pay. This is because these validators are directly related to the amount of computational power they have attached to the network.
Well, here’s a chart showing what the cumulative miner revenue and cumulative cost of production for Bitcoin miners look like today:
The costs, revenues, and the profits of the miners | Source: Glassnode on Twitter
As shown in the graph above, Bitcoin miners have generated approximately $50.2 billion in lifetime revenue, with a cumulative production cost of approximately $36.6 billion.
Revenues for this group exceed costs. So BTC miners are making some profit. By the numbers, the miner is making his $13.6 billion gross profit. This figure represents his 37% return on these chain validator investments.
Bitcoin is trading around $28,700 at the time of writing, up 4% over the past week.
Looks like the value of the asset has surged in the past day | Source: BTCUSD on TradingView
Featured image by Brian Wangenheim on Unsplash.com, charts on TradingView.com, Glassnode.com