Data from on-chain analytics firm Glassnode revealed the all-time gross profit margin for bitcoin miners; That’s what it is.
Bitcoin miners earned 37% of their total investment
In a recent tweet, glass Publish the latest data on the current situation of miners with respect to their revenue, cost and profit. First, to calculate the revenue for these on-chain validators, the analytics company took the sum of the “thermocap” and transaction fees that this group earned over its lifetime.
The thermocap is an indicator that measures the cumulative sum of an issuance multiplied by the spot price of bitcoin. In simpler terms, this metric tells us the total value of block rewards miners have earned over the lifetime of the network.
To find the costs incurred by this group, Glassnode used a ‘difficulty regression model’. This is a model for finding the cost of producing bitcoin, and it is based on “mining difficulty”.
Mining difficulty is a feature of the BTC chain that controls how hard miners on the network can mine. This concept exists because the chain wants to keep the block production rate (the speed at which mining blocks are hashed) at a constant value.
As the computing power attached to the miners (“hashrite”) changes, so does their ability to mine naturally. For example, miners can perform their tasks faster if they connect more devices to the network.
However, as mentioned earlier, the network does not want miners to get faster (or slower) than the standard rate, so it adjusts the difficulty to neutralize this change. In the case of this example, the chain’s difficulty will increase in response, slowing the miners down to the desired speed.
The difficulty regression model assumes that difficulty includes all costs that miners have to pay, because it is directly related to the amount of computing power these validators have connected to the network.
Now, here is a graph showing what the cumulative mining revenue and cumulative cost of production look like for bitcoin miners right now:
The costs, revenues, and the profits of the miners | Source: Glassnode on Twitter
As shown in the graph above, bitcoin miners have a lifetime revenue of about $50.2 billion, while the cumulative cost of production is about $36.6 billion.
The revenue was higher than the costs of this pool, which means that BTC miners have made some gains. In numbers, the miners have made an all-time total profit of $13.6 billion. This figure represents a 37% gain on the chain’s auditors’ investments.
BTC price
At the time of writing, Bitcoin is trading at around $28,700, up 4% in 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 from TradingView.com, Glassnode.com