The state of Bitcoin mining

1} Bitcoin is as good as the miners who run it. And they have been doing well recently

Bitcoin hash rate is a proxy for the supply side of the network, and it has been parabolic for last few years now

More nodes running Bitcoin -> Higher Hash Rate -> Increased computation to secure the network

What's the incentive to run the node -> Bitcoin mining rewards which is roughly 6 BTC or $250,000 every 10 mins. There was $40.4 million paid out in the last 24 hours to miners. That is $14.7 billion annualized. There is almost no scenario where hash rate is going to stop growing when more than $14 billion in revenue is up for grabs on an annual basis.

2} Another area to pay attention to is miner revenue from transaction fees

The transaction fee revenue spikes in the bull market as tons of people are trying to use the blockchain. Recently it was driven by Ordinals/Inscriptions

Who runs it? Interestingly, there are multiple publicly traded companies that are into Bitcoin mining, who mine Bitcoins and sell these to finance their operations.

The industry players are up big time this year:

Marathon Digital: +359%

Iris Energy: +356%

Cleanspark: +356%

Riot Platforms: +349%

And thus the performance of these compliant firms gets better as the price appreciates.

3} Another interesting data point is how miners are handling the bitcoin on their balance sheet.

You can see that miners have been net sellers since the start of November, which suggests that these organizations are taking advantage of the recent price appreciation and selling into the strength to drive further cash reserves.

Overall, bitcoin mining seems to be in a great spot. Hash rate is at all-time high levels. Miners are pulling in $14+ billion in annualized revenue. The stock price of publicly traded companies is wildly outperforming bitcoin’s price performance. And we have not yet experienced the bitcoin having slated for early Q2 2024.

The global cryptocurrency market cap today: $1.6 Trillion

Daily change: -3.19% | Yearly change: 88.84% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $796 Billion.

Weekly change: -3.79% | YTD change: 146.83%

Another important metric is Bitcoin dominance which can be used as a rough indicator of the relative strength of Bitcoin versus other cryptocurrencies. A high Bitcoin dominance means that Bitcoin has a large market share and is potentially more influential in the overall cryptocurrency market and vice-versa.

Bitcoin dominance: Current Year: 51.65% | Last year (Dec 2022): 39.98%

The market sentiment has greed levels in the higher range with current Bitcoin and Altcoin rally

Note: The data used is based on metrics like Volatility, Surveys, Bitcoin Dominance, Social and Google Trends. Source: Coinstats

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW.

The significance of the chart - understand how the supply of Ethereum is decreasing post the merge, which means “deflationary economics” for the Blockchain

Supply change since merge POS -326,166 ETH

The graph highlights POS issuance since the merge. Impressive numbers, look super bullish for ETH long term given the supply of ETH is not growing as before

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The Ends of Aragon Aragon had a dream to remake capitalism with decentralized autonomous organizations. As it faces a governance crisis, what can we learn about how to organize DAOs in the future?

Here’s a meme to make your week,

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research