• Bitcoin miners are currently earning 12% less than the average for the past year.
• The “puell multiple” is a metric used to measure the ratio between daily miner revenue and 365-day moving average of the same.
• Mining difficulty is an important factor that affects miner revenues as it slows down miners when the network hash rate goes up.
Bitcoin Difficulty Adjusted Puell Multiple
The Bitcoin difficulty-adjusted puell multiple has been below one recently, suggesting that BTC miners may still be under pressure. This metric measures the ratio between daily Bitcoin miner revenue (in USD) and 365-day moving average (MA) of the same. When the value of this metric is greater than one, it suggests that miners are making more than their average for the past year; however, values below this threshold imply that miner revenues are below their yearly average.
Why Is The Puell Multiple Below 1?
Currently, miners are earning around 12% less than their average for the past year, indicating they may be coming under pressure. This may be due to the fact that mining difficulty is not taken into consideration when calculating this metric. Mining difficulty is a built-in feature of the Bitcoin blockchain designed to keep block production rate at a constant value by increasing difficulty if hashrate goes up too much. When there are more miners on a network, each individual’s share of rewards decreases which can lead to decreased earnings overall.
Difficulty Adjusted Puell Multiple
To account for this variable in determining how profitable miners are, researchers have created a modified version called “difficulty-adjusted puell multiple” which takes into account both price and mining difficulty when measuring profitability over time. This indicator can help to identify whether or not current conditions remain profitable for BTC miners without needing to take into consideration changes in hashrate or other factors affecting their income.
The fact that the difficulty adjusted puell multiple has been below one recently suggests that BTC miners may still be under pressure even though they were able to break even with prices during periods of high volatility earlier in 2021. By taking into account both price and mining difficulty when assessing profitability over time using this indicator, we can get an accurate picture of how well these digital asset participants have been doing lately compared to historical averages and expectations going forward.