The chart displays the relationship between Bitcoin price and the profitability of mining operations over time .
- Miner Profit/Loss Sustainability (Colored Areas):
- The vertical axis on the left represents the sustainability of miner profits/losses.
- The chart uses different colors to indicate periods when miners were:
- Extremely Overpaid (Red)
- Overpaid (Orange)
- Fairly Paid (Gray)
- Underpaid (Black)
- Extremely Underpaid (Blue)
- Miner Profit/Loss Sustainability Trends:
- Miners experienced periods of extreme underpayment (blue) mainly in the first half of the period and again in mid-2024.
- Periods of overpayment (red and orange) were more frequent from mid-2023 to early 2024.
- There are notable dips below the green line in June 2023, January 2024, and May 2024, indicating times when miners were extremely underpaid.
Interpretation:
- Miner Profitability:
- Sustained periods of miners being extremely underpaid could lead to reduced mining activity or shifts in mining strategy.
- Conversely, sustained profitability (overpayment periods) can incentivize more mining operations, increasing network security but also potentially increasing competition.
- Market Sentiment:
- The periods of extreme underpayment could reflect market stress, where the cost of mining is not adequately covered by the revenue from mined Bitcoins.
- Overpayment periods suggest bullish market conditions where the value of mined Bitcoins significantly exceeds mining costs.
Written by Amr Taha