Miner Revenue and Puell Multiple
Structure of Miner Revenue
Bitcoin miner revenue consists of two components.
1. Block Subsidy
This is the fixed reward received for successfully mining a new block. This reward goes through a halving approximately every 4 years (210,000 blocks).
| Period | Block Reward | Daily Issuance (Approximate) |
|---|---|---|
| 2009-2012 | 50 BTC | 7,200 BTC |
| 2012-2016 | 25 BTC | 3,600 BTC |
| 2016-2020 | 12.5 BTC | 1,800 BTC |
| 2020-2024 | 6.25 BTC | 900 BTC |
| 2024-2028 | 3.125 BTC | 450 BTC |
2. Transaction Fees
These are the network fees generated from transactions included in the block. As block rewards decrease through halvings, the proportion of fees is gradually increasing.
Total Miner Revenue
Daily Miner Revenue = (Block Reward x Daily Block Count) + Daily Total Fees
The USD value of this revenue represents miners' actual income and determines the sustainability of mining operations.
Why Miner Revenue Matters
Miners are structural sellers in the Bitcoin ecosystem. Since electricity costs, equipment costs, labor, and other mining expenses must be paid in fiat currency, miners must regularly sell a portion of their mined Bitcoin.
- When revenue is high: Miners sell only operating costs and accumulate the rest → Reduced market selling pressure
- When revenue is low: Miners sell holdings to cover operating costs → Increased market selling pressure
- When revenue falls below cost: Miner capitulation occurs → Large-scale selling followed by market bottom formation
Puell Multiple
The Puell Multiple is an indicator developed by David Puell that compares daily miner revenue to its 365-day moving average, measuring how high or low current revenue is relative to the historical average.
Calculation Method
Puell Multiple = Daily Miner Revenue (USD) / 365-day Moving Average Miner Revenue (USD)
Interpretation
| Puell Multiple | Meaning | Market Interpretation |
|---|---|---|
| Above 4.0 | Revenue more than 4x average | Extreme overheating. Near historical top |
| 2.0-4.0 | Revenue high vs average | Late bull market. Caution needed |
| 0.5-2.0 | Average-level revenue | Normal range |
| Below 0.5 | Revenue less than half average | Miner stress. Bottom signal |
Historical Patterns
The Puell Multiple has shown high accuracy at major Bitcoin cycle turning points.
- 2011 top: Puell Multiple > 8
- 2013 top: Puell Multiple > 6
- 2017 top: Puell Multiple > 4
- 2021 top: Puell Multiple > 3.5
Conversely, periods when Puell Multiple dropped below 0.5 were mostly bear market bottoms. Investors who bought during these periods historically achieved high returns.
Halving and Puell Multiple
Halving directly impacts the Puell Multiple. When block rewards are cut in half, daily miner revenue drops sharply, automatically causing the Puell Multiple to decline.
Pattern Before and After Halving
- Just before halving: Block rewards are still high and price is trending up, so Puell Multiple is at elevated levels
- Just after halving: Rewards cut in half causes Puell Multiple to plunge. Miner stress zone
- Price rise phase: Price increases offset reward reduction, Puell Multiple recovers
- Cycle peak: Price surge pushes Puell Multiple to extreme highs
Understanding this pattern helps correctly interpret Puell Multiple fluctuations around halvings.
Miner Balance and Position Changes
Tracking Miner Wallets
By tracking the receiving addresses of coinbase transactions (transactions receiving block rewards) on the blockchain, miner wallets can be identified. Observing balance changes in these wallets reveals miner selling/accumulation behavior.
Miner Position Index (MPI)
MPI compares miner Bitcoin outflows to their 1-year moving average.
- MPI > 2: Miners selling more than usual. Short-term bearish signal
- MPI < 0: Miners selling less than usual (accumulating). Bullish signal
Miner to Exchange Flows
Bitcoin movement from miner wallets to exchange wallets is a direct signal of selling intent. A surge in this flow indicates increased selling pressure.
Mining Cost
Breakeven Point
Bitcoin mining cost is calculated by adding electricity costs, equipment depreciation, and operating expenses. When Bitcoin price falls below mining cost, mining becomes unprofitable, triggering miner capitulation.
Mining costs vary significantly by region, electricity price, and equipment efficiency.
| Factor | Efficient Mining Operation | Inefficient Mining Operation |
|---|---|---|
| Electricity Cost | $0.03/kWh | $0.08/kWh |
| Equipment | Latest ASIC | Older ASIC |
| Mining Cost (per BTC) | ~$15,000-20,000 | ~$35,000-50,000 |
These numbers are examples and vary significantly based on timing and conditions.
Mining Cost and Price Floor
Historically, Bitcoin price has not stayed below the network-average mining cost for long. When mining becomes unprofitable, miners exit, hashrate and difficulty drop, selling pressure is exhausted, and then price recovers - a self-correcting mechanism is at work.
Combining with Other Indicators
Puell Multiple + MVRV
Periods when Puell Multiple is below 0.5 while MVRV is also below 1.0 have historically been the strongest buying zones. These are extreme pessimism phases where both miners are stressed and market participants are on average at a loss.
Puell Multiple + Hash Ribbon
When the Hash Ribbon shows a capitulation signal while the Puell Multiple is also in the bottom zone, it provides double confirmation that miner capitulation is underway. When the Hash Ribbon transitions to a recovery signal, confidence in bottom formation increases.
Summary
Miner revenue and Puell Multiple are core indicators for understanding Bitcoin's supply-side dynamics. Since miners are structural sellers, observing their revenue status and behavior allows you to gauge market selling pressure. The Puell Multiple has shown high accuracy in capturing extreme cycle turning points (tops and bottoms), and becomes an even more powerful analytical tool when combined with MVRV and Hash Ribbon.
Next article: Exchange Inflows and Outflows - Signals of Buying and Selling