The Changing Role of Bitcoin Miners in Valuation
A recent report from Glassnode, an on-chain analytics firm, examines the factors contributing to Bitcoin’s “realized cap.” Unlike traditional market cap, which values all tokens at the current spot price, realized cap considers the last transaction price as the true value of a coin. It serves as a measure of the total value stored within the cryptocurrency.
The realized cap consists of three key metrics: realized profit, realized loss, and issuance. Realized profit and loss track the gains and losses made by investors through selling. On the other hand, issuance represents the newly minted supply created by miners as block rewards.
Over time, the contribution of miners to Bitcoin’s daily realized value has decreased significantly. In 2016, miners accounted for 20% to 40% of the net value entering or exiting BTC each day. However, as the market has matured and block rewards have reduced, their contribution has declined. In recent years, issuance has only made up 1-2% of daily realized value and occasionally reached a high of 10% during specific periods.
Glassnode suggests that miners have the most significant influence on valuation during periods of low liquidity and minimal trade volume. This tends to occur during late-stage bear markets when investor demand is weak.
Bitcoin Price Recovery
In recent days, Bitcoin’s price has been steadily rising and has now recovered to around $26,400.
Hot Take: Miners’ Impact on Bitcoin Valuation Declining Over Time
On-chain data from Glassnode reveals that Bitcoin miners are playing a decreasing role in determining the asset’s valuation. As the market matures and block rewards decrease, miners’ contribution to daily realized value has significantly diminished. Their influence is most pronounced during periods of low liquidity and weak investor demand. This highlights the evolving dynamics of the cryptocurrency ecosystem and the shifting factors that impact Bitcoin’s value. As Bitcoin continues to gain mainstream acceptance, it will be interesting to see how miners’ role in valuation further evolves.
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