Key Insights
- Puell Multiple Offers Bitcoin mining health snapshot at maximum pain point this month.
- Miner reserves dropped to 12-month lows earlier this week but have shown signs of recovery.
- Key details behind miner resilience, including profitability despite the Bitcoin price dip and hash rate performance.
One of the best ways to assess the health of the Bitcoin mining industry is to look at its Puell Multiple.
It’s an indicator that looks into Bitcoin miner profitability to establish or assess supply conditions.
The Bitcoin mining Puell Multiple dipped as low as 0.67 on 25 November, which marked its lowest level in the last 12 months. The last previous time that it retested similar levels was in September 2024.
The Bitcoin Mining Puell Multiple has since bounced back to 0.91. Historically, when the indicator drops below 0.5 it signifies heavy financial pressure for Bitcoin miners and lower mining revenues than usual.
Consequently, miners who can’t break even are forced to exit, and this may ease sell pressure. When the indicator is between 0.5 and 1, it indicates that mining is sustainable, but prices may be in undervalued territory.
Values between 1 and 3 highlight healthy market conditions and higher profitability. Bitcoin miners might be incentivized to sell if the Puell Multiple pushes above those levels. Bitcoin miner reserves also clocked a 12-month low in November
Why Bitcoin Mining Reserves Fell Along with the BTC Price
While the Puell Multiple suggests that miners may be incentivized to accumulate, the Bitcoin miner reserves painted a different picture.
Bitcoin mining reserves maintained an overall downtrend in the last 12 months, highlighting a positive correlation with declining Bitcoin prices.
The declining miner reserves suggest that this cohort of holders was offloading their coins, and there could be multiple reasons for this.
The first could be miner capitulation due to concern that declining Bitcoin price action would erode their profits.
Previously elevated BTC prices may have also encouraged profit-taking. Mining difficulty also maintained an overall uptrend over the last 12 months.
This means profitability has been declining, and thus miners may have been forced to sell some of their coins to cover operating costs.
Note that Bitcoin miner reserves have improved slightly, highlighting a direct correlation with price.
This suggests that miners may not contribute as much selling pressure if they anticipate more correction to the upside, preferably to sell at much higher prices.
Why Bitcoin Miner Outflows Supported the Mining Hash Rate
The declining reserves may have allowed miners to offset some of the pressure as difficulty went up and profitability declined.
Its hash rate maintained an overall uptrend despite recent market headwinds. This suggests that miners maintained a healthy degree of flexibility and balance even as the market experienced heavy volatility in the last few months.
The Bitcoin mining Puell Multiple aligns with recent metrics, which signaled that Bitcoin might be in a healthy buying zone.
However, it also suggests that it could still have room for more downside before the sell pressure is considered overheated.
Miner reserve flows play an essential role in the grand scheme of things. Miners represent the only avenue through which new Bitcoin supply enters the market.
If their reserves embrace an uptrend, then this means lower sell pressure and hence Bitcoin price may have an easier time recovering.