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Bitcoin Ordinals haven’t wrestled blockspace from money TXs: Glassnode

September 27, 2023 Coin Telegraph

Bitcoin Miners

Inscriptions have been acting more as a "packing filler," stuffed into any remaining space once higher-value monetary transfers are packed into blocks, said the firm.

Despite concerns that Bitcoin Ordinals are clogging the network, there is little evidence to suggest inscriptions are taking blockspace away from higher-value Bitcoin (BTC) monetary transfers.

“There is minimal evidence that inscriptions are displacing monetary transfers,” on-chain analytics firm Glassnode explained in a Sept. 25 report.

The firm explained that this is likely because inscription users tend to set low fee rates, expressing willingness to wait longer periods of time for confirmation.

“Inscriptions appear to be buying and consuming the cheapest available blockspace, and are readily displaced by more urgent monetary transfers.”

Bitcoin Ordinals were introduced in Feburary 2023, and have since accounted for the lion’s share of network activity when it comes to daily transaction count.

However, this hasn’t necessarily been reflected in its share of mining fees, with inscriptions only attributing to about 20% of Bitcoin transaction fees, Glassnode noted.

*Inscription fee share between images, text, audio, video and other data types on Bitcoin. Source: Glassnode.*

More inscriptions means more revenue — but there’s a catch

While inscriptions have strengthened the base-load demand for blockspace and increased fees for miners, Glassnode says Bitcoin’s hashrate has also increased 50% since February.

This has resulted in tougher competition for miners looking to swoop in on revenue fees, says Glassnode:

“With extreme miner competition in play, and the halving event looming, it is likely that miners are on the edge of income stress, with their profitability to be tested unless BTC prices increase in the near term.”

Bitcoin is currently priced at $26,216 but many industry pundits expect some degree of price appreciation in the lead-up to Bitcoin’s halving event scheduled for April 2024.

Currently, most inscriptions come as a result of BRC-20 tokens, which were introduced one month after Casey Rodamor launched the Ordinals protocol on Bitcoin in February.

On Sept. 25, Rodarmor pitched “Runes” as a potential alternative to BRC-20s, suggesting that a UTXO-based fungible token protocol wouldn’t leave as much “junk” unspent transaction outputs on the Bitcoin network.

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Bitcoin miners need BTC price over $98K by the halving — Analysis

August 4, 2023 Coin Telegraph

Bitcoin miners need BTC price over K by the halving — Analysis

Bitcoin Halving

To avoid being in the red, publicly-listed Bitcoin mining companies will need the BTC price to be at least $98,000 by the 2024 halving.

Predictions that Bitcoin (BTC) will see a six-figure price by the end of 2024 continue to surface despite the BTC price losing the $30,000 level recently.

For publicly-listed Bitcoin miners, in particular, a price north of $100,000 may be more of a necessity than a forecast if their business models are to remain profitable.

Bitcoin halving: Bad news for public miners?

Bitcoin mining stocks have been on a tear this year, outperforming BTC by a wide margin in recent months. While BTC has seen reduced volatility and a period of consolidation, Bitcoin mining companies’ stocks have risen by nearly 100% in a matter of months.

*Recent performance of popular BTC mining stocks. Source: Seeking Alpha*

A recent report by Seeking Alpha explores BTC mining by examining one popular miner in particular: Riot Platforms.

It notes that despite Riot being expected to triple its mining capacity in 2024, the company and Bitcoin miners, in general, could face serious headwinds from the halving . A 50% decrease in BTC block rewards cuts miners’ main source of revenue in half.

Miners like Riot can also issue new equity shares to fund their operations. This dilutes existing shares, meaning that even if the company’s underlying fundamentals are sustained, the share price may not keep up.

Combine this with the fact that many miners could already be overbought at current valuations, and things don’t look too rosy for public Bitcoin mining stocks. Although public mining stocks have outperformed Bitcoin in 2023, an increase in BTC being sent to exchanges could indicate a decline in momentum.

A big increase in Bitcoin’s price will therefore be required for miners to remain profitable at today’s hash rate levels.

Bitcoin miners have had a banger of a year.

RIOT is up 457%
MARA is up 421%
BITF is up 337%
CLSK is up 246%

Both Bitcoin and Nvidia rose by less than public miners this year — 80% and 222% respectively.

The best way to get leveraged/high-beta exposure to BTC.

h/t @zackvoell pic.twitter.com/xTsJqikh0L
— Joe Consorti ⚡ (@JoeConsorti) July 18, 2023

Miners might need six-figure Bitcoin to stay afloat

How high does the BTC price need to go for miners to maintain their current valuations? The report mentioned above concludes that nearly $100,000 could be required for miners to carry on as usual:

“Unless Bitcoin outperforms our Bitcoin thesis, we don’t see any way where the Bitcoin sector can come out unscathed. Even with RIOT’s ambitious 35 EH/s, our model suggests that Bitcoin needs to trade above $98,000 to justify RIOT’s current valuation (post-halving).”

Based on this, the report warns that “hodling” BTC mining stocks is “extremely risky,” as underlying fundamentals may not keep pace with current valuations that may not be pricing in next year’s Bitcoin halving yet.

BTC price to $125,000 in 2024?

Meanwhile, a recent report from Matrixport entitled “Matrix on Target: Prepare for the Soaring 2024 Year-End Bitcoin Target of $125,000” describes how BTC could reach $45,000 by year-end and $125,000 by the end of 2024.

The significance of Bitcoin price reaching a one-year high for the first time in a year is emphasized by the authors.

This signal has marked the beginning of a new bull market every time in the past:

“On June 22, 2023, Bitcoin made a new one-year high, marking the first time in a year. This signal has historically indicated the end of bear markets and the start of new crypto bull markets. Previous occurrences took place in August 2012, December 2015, May 2019, and August 2020, with the actual bull markets materialising in 2013, 2017, and 2021.”

It continues:

“This signal has been triggered four times and in all four cases, the bull market fully unfolded within 12-18 months. If history is any guide, then, there is now a 100% probability that by the end of 2024, Bitcoin will experience another massive bull market with a price target of $125,000 (+310%) - based on the previous three signals.”

This six-figure Bitcoin price prediction echoes numerous others . Standard Chartered, for example, forecasts a $120,000 Bitcoin price by the end of 2024. Interestingly, this is largely based on BTC miners not selling Bitcoin before the halving.

Bitcoin may reach $120,000 by the end of 2024, Standard Chartered forecasts, as an expected improvement in crypto miners' fortunes allows them to hold on to more of the tokens https://t.co/Z9z0BbKCqS
— Bloomberg Crypto (@crypto) July 11, 2023

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin miners send record $128M in revenue to exchanges

June 28, 2023 Coin Telegraph

Bitcoin Miners

Bitcoin miners have sent up to 315% of their daily revenue to exchanges but BTC prices are yet to react.

Bitcoin (BTC) miners are sending record amounts of BTC to centralized crypto exchanges.

In a June 27 tweet, on-chain analytics platform Glassnode reported an all-time high in Bitcoin miner revenue sent to exchanges.

*Percent of miner revenue sent to exchanges. Source: Glassnode*

It noted that there was currently an “extremely high exchange interaction,” from Bitcoin miners which had sent a record $128 million to exchanges over the past week. This is equivalent to 315% of their daily revenue, the analytics platform noted.

There have been several spikes in miner revenue sent to exchanges during the 2021 bull run as they took profits. There was also a capitulation inflow in late 2022 as markets hit their cycle bottom.

However, this latest spike has dwarfed them all by a considerable margin.

Usually, when miners send BTC profits to exchanges they do so in preparation to cash out to cover their expenses and take profits.

This past week would be a good time to do so since BTC hit its highest price of the year so far, touching $31,185 on June 24.

At the time, CryptoQuant co-founder and CEO Ki Young Ju echoed the sentiment, stating that the current price-to-earnings ratio was at an “attractive price for miners to sell.”

Bitcoin prices are yet to be affected however, as the asset remains slightly above the $30,000 threshold at the time of publication.

Nevertheless, the current $31,000 price zone is a major resistance level for BTC, with markets failing to break it in mid-April and again in late June. If bulls can't break new ground future losses are expected, especially if miners start liquidating.

Bitcoin mining profitability, or hash price, has increased slightly over the last week due to the rise in BTC prices. It is currently $0.076 TH/s (terahashes per second) per day, according to HashrateIndex.

Despite the price of Bitcoin increasing more than 88% year-to-date, miners are still facing some tough challenges. Profitability has slumped more than 30% since July last year and is down over 80% since the peak of the 2021 bull market.

When combined with almost record hash rates of 377 EH/s and peak difficulty levels, Bitcoin miners are still facing an uphill battle.

Increasing hash rates and difficulty, combined with higher energy prices, have put downward pressure on mining profitability. This means that selling their hard-earned Bitcoin may prove an unpleasant necessity to cover expenses.

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Bitcoin Miners

More inscriptions means more revenue — but there’s a catch

Bitcoin halving: Bad news for public miners?

Miners might need six-figure Bitcoin to stay afloat

BTC price to $125,000 in 2024?

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