Bitcoin surge brings new hope to miners after months of falling profits

by James · March 27, 2023

Increased demand for block space on the BTC network has led to an increase in transaction fees.
This has resulted in a jump in the total miners’ earnings.

The latest increase in the price of Bitcoin [BTC] has caused a significant shift in mining activity on the BTC network. Pseudonymous CryptoQuant analyst Chained up found that the 68% jump in the year-to-date value of the king coin has resulted in an increase in fees per transaction due to the increased demand for block space.

Unchained noted that the rise in BTC’s price since the beginning of the year has led to high network activity on the Bitcoin blockchain. As a result, there has been an increase in demand for block space on the network. And users have had to attach a fee to incentivize miners to prioritize their transactions over others in the mempool, leading to an increase in overall miners’ fees.

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On why demand for block space on the Bitcoin network has increased significantly recently, the analyst noted:

“It appears that Bitcoin is being withdrawn from exchanges at a rapid pace, which may be the main reason for the increase in transaction fees. This is likely due to holders wanting to keep Bitcoin safely off exchanges. The banking crisis in the United States has led to an increase in the number of people withdrawing their Bitcoins from exchanges. As more people lose faith in the traditional banking system, they turn to cryptocurrencies as a means of securing their assets.”

Source: CryptoQuant

Another analyst Achraf Elghemri assessed miners’ earnings on the Bitcoin network and found that increased transaction fees on the network caused by the increase in demand for block space has resulted in higher returns for miners.

Elghemri assessed BTC’s Puell Multiple Index and found that the total amount of BTC earned by miners for processing transactions on the network has grown “as a result of collecting the gains from the rising market and covering the costs of mining.”

Source: CryptoQuant

According to data from Glass nodeOn March 23, the total miners’ earnings rose to a peak of 1,182 BTC, the highest the chain has seen in the last three months.

Source: Glassnode

BTC holders have a good reason to smile

Since the year began, the 68% jump in BTC’s value has seen many of its holders profit – the most seen in the past year.

Data from Santiment showed the coin’s MVRV ratio at 43.17%. This indicated that if all BTC holders sell their coins at the current market price, they can expect to generate an average profit of twice their initial investment.

Read Bitcoins [BTC] Price prediction 2023-24

Furthermore, for most of the year, BTC’s Network Profit/Loss ratio metric has only returned positive values. In the aftermath of Silicon Valley Bank’s collapse, this metric took a significant drop as “weak hands” left the market due to the decline in BTC’s value.

However, this gave way to “new money”, which re-entered the market and drove up the coin’s price with the necessary liquidity.