The state of bitcoin miners in one dashboard!
The Bitcoin mining dashboard provides various data and indications pertaining to bitcoin miners.
Bitcoin Mining Dashboard
This dashboard displays a variety of information and signals about bitcoin miners, including:
- Revenue
- Costs
- Flows
- Selling pressure
Our goal is to combine all on-chain metrics to evaluate the financial health of bitcoin miners (income and costs) as well as the behavior of bitcoin miners (what their bitcoin flows might tell us about what they are doing).
From miners, we can learn about the potential selling pressure for bitcoin, how much it is worth, and where the market is in its cycle as a whole. Bitcoin miners create revenue from the block subsidy, which is the newly made bitcoin given to the miner who solved the proof-of-work puzzle successfully, and from the fees that users pay to have their transactions included in a block. So, we can figure out how the miners and the Bitcoin network are doing by looking at block fees and rewards.
When there is a lot of activity on a network (meaning many transactions need to be processed), fees generally climb or even spike dramatically in some instances. This increase or spike might foreshadow trends in market cycles.
Mining Difficulty
In addition to the cost of electricity, the difficulty of mining is one of the most critical factors that determine how much it costs to mine bitcoin. Because of the increased difficulty, existing Bitcoin miners will have to pay more for resources while still producing the same amount of bitcoin. There is a correlation between mining difficulty and hashrate. The number of miners contributing to the network, or the hashrate, will affect how hard it is to mine, and vice versa.
The mining difficulty is adjusted upwards or downwards every 2016 block, roughly once every two weeks. This is done in order to maintain the block interval at an average of 10 minutes. These indicators give a summary of the different things miners do. This lets us figure out how risky it is for miners to sell BTC at the top or bottom of the market and helps us figure out how much bitcoin is worth.
The Miners’ Position Index (MPI)
Miners’ Position Index metric compares the amount of Bitcoin (BTC) mined over the past year with its moving average over the same time period. In a bear market, a rise in the MPI means that miners are giving up and selling their bitcoin at a loss. This usually happens at market peaks, before price corrections, or when miners move larger than usual amounts of their coins. In bull markets, an MPI spike indicates miners are buying Bitcoin.
Miner Sell Pressure (MSP)
This function measures the change over 30 days in the total amount of bitcoin moving from miners to exchanges each week. This indicator determines how much selling pressure is being applied to BTC by miners, which often occurs during market tops, prior to price corrections, or as an indication of miner capitulation (miners selling their BTC at a loss) in bad markets when the price of Bitcoin is falling.
When the value is higher, it means that miners are depositing more bitcoin into exchanges.
