Bitcoin miners' income returns to pre-halving levels, which may push Bitcoin prices to a record high

Key on-chain metrics such as Bitcoin mining revenue have returned to pre-halving levels, according to new research.

Data from analytics provider Glassnode suggests that Bitcoin mining revenue is now back to where it was when block rewards were twice as high as they are today.

When the Bitcoin halving occurred in mid-May, the BTC price was around $9,000. On November 18, the price doubled to $18,000, suggesting a correlation: miners need to sell enough Bitcoin to cover expenses while still maintaining a profit. Higher prices mean greater profits.

Bitcoin miner revenue has returned to pre-halving levels.

— glassnode (@glassnode) November 18, 2020

The findings were confirmed by Blockchain.com, which tracks the total value of coinbase block rewards and transaction fees paid to miners.

Daily revenue (including block rewards and transaction fees) reached $21.2 million on November 18, the highest level in a year. The previous peak occurred on May 6, reaching $20.6 million. After the halving, the block reward dropped from 12.5 BTC to 6.25 BTC, and daily revenue plummeted to $7 million.

Mining revenues took a nosedive on March 18, shortly after the pandemic-induced crypto market crash, causing the price of Bitcoin to fall 45% in less than a week. When mining revenues drop drastically, over-leveraged miners may begin to capitulate due to unfavorable market conditions.

As the Bitcoin price approaches its all-time high, the opposite appears to be happening currently.

Another indicator of network health and miner satisfaction is hashrate, which is currently just 10% below its peak.

The majority of Bitcoin mining takes place in China. After the rainy season ended in China, miners were shut down in preparation for migration as cheap hydroelectric power dried up. This caused the hashrate to plummet 37% in a quarter, to below 98 hashes per second.

The hash rate, which is widely considered to be correlated with price, has since recovered to 143.4 EH/s, not far off its mid-October peak of 157.6 EH/s, according to Bitinfocharts.com.

Current mining revenue and hashrate recovery rates suggest a continuation of the bull run, which could push Bitcoin prices to new all-time highs by the end of the year.