Bitcoin (BTC) miners generated $ 4 million in revenue in less than an hour as of February 12, according to data from Glassnode. Thus, the highest hourly income level in history was reached.
In May 2020, Bitcoin halved the block reward for the third time in its history, and the amount of new Bitcoin obtained at the end of mining was halved.
After the block reward halving, the amount of new BTC produced by BTC miners using the computing power they have gained from their hardware is reduced by half. Hence, miner revenues decrease by 50 percent following the ‘halving’ process, which can cause difficulties in mining operations in the short term.
On the other hand, the hash rate of the Bitcoin network has also reached all-time highs, seeing the fourth consecutive increasing difficulty adjustment expected to be roughly 2.5 percent in seven days.
So why are Bitcoin miner revenues rising?
Block reward halving occurs every four years to lower the rate at which the remaining Bitcoin supply is released.
As Bitcoin approaches its fixed supply of 21 million, the rate of issuance of new BTC is reduced by halving. However, the halving may prove to be insufficient for the miners to mine the BTC to cover their costs in the short term.
Theoretically, when a halving occurs, the Bitcoin price is expected to rise as the supply of new coins entering the market becomes scarce. Therefore, the higher BTC price becomes to cover the expenses of the BTC miner producing less.
This week, Bitcoin miners achieved the largest hourly income in history, despite mining BTC half as much as last year.
It shows that Bitcoin’s value increase is working as planned after the block reward halving, prompting miners to increase their hash rates and invest in the security of the network. Analysts at Glassnode summarized as follows:
“BTC miners earned over $ 4 million an hour. The highest hourly miner income in Bitcoin’s history.”
Another reason for the increased miner income is the increased number of transactions on the network and the resulting transaction fees paid to miners. According to data from Clarkmoody, 13.5 percent of miner’s income is made up of transaction fees.
Will miner income continue to increase with the BTC price?
PlanB, the developer of the popular price prediction model stock flow (Stock to Flow, S2F) said Bitcoin is on track to reach $ 288,000.
The S2F model relies heavily on BTC’s supply (stock) and new Bitcoins mined (flow). It predicts the course of the price due to the scarcity of BTC.
If the BTC price approaches $ 60,000, the market value of the cryptocurrency will reach $ 1 trillion. Analysts say there may be a major squeeze waiting for Bitcoin at around $ 56,000. Therefore, there is still a high probability that BTC will rise from $ 53,000 to $ 56,000 in the first half of 2021.