On-chain data on May 7 shows that the profitability of bitcoin (BTC) miners is on the rise.
Bitcoin miner profitability rises 2X
BitInfoCharts reveals that for every TH/s of hash rate, which is the computing power funneled to the Bitcoin network, a miner earns $0.0988 daily.
The spike in miner profitability means gear operators are earning revenue at the fastest pace in three months. It should also be noted that the average miner profitability has more than doubled in the last three months at spot rates. As of March 12, it stood at $0.0589 but has continued rising.
You might also like: Bitcoin briefly rallies to $57,000 after a “glitch” on Bitfinex
Typically, the profitability of a miner largely depends on network activity, spot BTC price, and the ease of block confirming.
The ease of bitcoin block confirmation is gauged by prevailing difficulty levels. This metric shows how easy or hard it is for miners to confirm and add a block of transactions to the longest chain in exchange for the 6.25 BTC and block fee rewards.
On May 4, it dropped from record highs by 1.45% to 48.01T after five consecutive positive adjustments from late February 2023.
Network congestion, BTC prices rise
Thus far, the Bitcoin network, judging from the number of on-chain transactions posted, is at a multi-year high. When writing on May 7, there were over 400,000 pending transactions on the Bitcoin memory pool, better known as Mempool.
The Mempool is where unconfirmed but valid transactions are “parked” before they are confirmed and added to a block.
However, how fast a transaction is confirmed depends on whether the sender tags sufficient fees to incentivize the miner to confirm and add to the next block.
The tagged fee is, therefore, a factor determining how fast a BTC transaction can be mined and transmitted across the network. Overall, the average block time is 10 minutes. This is encoded at the protocol level and directly affects Bitcoin’s scalability.
The high miner profitability also coincides with relatively high prices. Since it tanked to $0.0589 on March 12, prices have risen steadily, peaking at $31,000 in April before contracting to spot levels. Still, this is relatively higher than on March 12, when prices fell below $20,000. Since then, BTC has risen 45% to spot levels.
Read more: Binance re-opens bitcoin withdrawals after brief suspension, blames ‘severe network congestion’