- Bitcoin Total Fees hit a 12-year low, weighing heavily on miner profitability.
- Puell Multiple at 1.2 suggested miners earn 20% above long-term averages.
With Bitcoin [BTC] hovering near $107k, both short-term and long-term holders remain comfortably in profit.
But miners? They’re grinding through one of their toughest cycles in over a decade.
3 reasons why Bitcoin miners are recording low profits
According to Alphractal, there are three main reasons why Miner profitability is historically low.
For starters, Total Fees paid on the Bitcoin network are at their lowest levels since 2012. At a 12-year low, this drop in fees is primarily driven by the low on-chain activity this cycle.
Source: Alphractal
When a network’s on-chain activity declines, it means reduced revenue for miners, as is currently being witnessed in the market.
At the same time, the Hash Rate has dipped, but Difficulty hasn’t. That’s unusual.
Source: Alphractal
The network hasn’t adjusted yet, putting a tighter squeeze on margins. This is likely caused by large mining operations shutting down ASIC machines over falling revenues and low network demand.
Usually, high Hash Rate Volatility is a red flag for network inconsistency and miner uncertainty. As a result, miners see a downward Difficulty Adjustment where ineffective miners are forced out of the market.
Source: Alphractal
Bitcoin miners are still not selling
Interestingly, while mining operations are challenging, miners haven’t started selling.
Source: CryptoQuant
According to CryptoQuant data, Miner Flow to Exchange dropped to a monthly low of 795.5 BTC as of the 29th of June. That’s a clear indication miners are holding, even while underwater.
That said, what’s notable is a dramatic shift from previous cycles.
During the past cycles, miners sold when prices were rising and during periods of high blockchain activity. This time, they’re staying put despite high BTC prices and low network activity.
So… why aren’t they selling?
It boils down to one thing: no strong reason to.
Source: Checkonchain
Although profits are down, miners are still making enough to stay afloat. The Puell Multiple stood at 1.2, meaning miner earnings are 20% above historical averages, despite poor market conditions.
Price pressure on BTC?
Undoubtedly, reduced selling by significant market players, such as miners, is a precursor to higher prices. When this group stops selling, it eases downward pressure on BTC, creating a more stable environment for further growth.
Therefore, if miners continue to hold their Bitcoin, regardless of the challenging mining conditions, it sets BTC up for further gains. That said, if these circumstances persist, BTC will attempt to break out of its current consolidation and target $109,000.
However, if miners find incentives to sell, it will result in higher selling pressure, thus causing downward pressure on BTC.
In that case, a breakdown from the recent uptrend will occur, leading to a retracement to $104,000.
