{"uuid":"aec5d292-d140-42a9-4fd9-7c02cbc889bc","categoryUuid":"752fce11-1913-47e4-5707-91c0b669f02b","data":{"meta":{"name":"BTC: Miner Capitulation Risk"},"configs":[{"meta":{"refUuid":"8f9fe11f-baea-4cb7-57f8-66eda8576032"},"uuid":"268dfd71-c4ff-4da3-af68-2f8fa5d6d8c3","extra":{"zoom":"All"},"configType":"workbench"},{"meta":{"content":"# Estimating the Cost of Production\n\n---\n\n### Difficulty Regression Model\n\nThe Difficulty Regression Model 🟣 is an estimated all-in-sustaining cost of production for Bitcoin (for the average miner). It considers Difficulty as the ultimate distillation of mining cost, accounting for all the mining variables into one number.\n\nWhere spot prices trade close to, or below this level, it may signal miner income stress is becoming acute.\n\n### Difficulty Multiple\n\nThe Difficulty Multiple is a simple oscillator to visualize the distance between the spot price and the Difficulty Regression Model Price. \n`(Price / Difficulty Regression Price)-1`\n\n- **Difficulty Price \u003e Spot Price** 🟢 Where the production cost of 1 BTC  is estimated to be higher than the spot price.\n\n- **Difficulty Price \u003c Spot Price** 🔴 Where the production cost of 1 BTC  is estimated to be lower than the spot price."},"uuid":"e3811e09-19dd-4f72-825c-db1aae41719f","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"# Hash Ribbons\n\n---\n\nWhen the mining industry is under acute income stress, such as during market downturns, some portion of mining hardware becomes unprofitable, and is switched off. Such periods are often short-term 'events', leading to a rapid decline in hashrate.\n\nThe **Hash Ribbons** chart helps us identify the start of this process, where the most inefficient miners start to go offline, and the ribbons invert to the downside. They can also signal where recovery is underway when the ribbons revert back to the upside.\n\n- **Negative Inversions ↘️** occur when the faster 30D-SMA 🟢 plunges below the slower 60D-DMA 🔵. This is a period of acute miner income stress, and an elevated risk of capitulation (signalled by 🟥 zones).\n\n- **Positive Inversions ↗️** occur when the faster 30D-SMA 🟢 rises back above the slower 60D-DMA 🔵. This is a period of reduced miner income stress, and a signal of industry recovery."},"uuid":"b87276fe-2d6b-4996-bf81-a3afa98c2ad1","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"# Miner Capitulation Risk\n\nThis model combines both implied and explicit miner income stress models into a single **Miner Capitulation Risk** metric.\n\n1. **The Puell Multiple 🟠** is an implied income stress model, with very low values signalling a heightened probability of miner income stress.\n\n2. **Difficulty Ribbon Compression (DRC) 🟣** is an explicit observation of income stress, with low values signalling that a statistically significant portion of hashrate is coming offline, and is similar to a negative hash-ribbon inversion.\n\nWhen both the Puell Multiple and DRC signal stress, this metric will return a 🟨 zone, indicating a high probability that a **Miner Capitulation** is underway.\n\n### Interpretation Guide\n\n- When miners are under income stress, they must liquidate increasing coin volumes to cover the same fixed USD costs.\n\n- Throughout extended bear markets, this results in both the liquidation of miner treasuries, and also a reshuffling of hashpower towards more efficient miners with stronger balance sheets."},"uuid":"f28999b2-ab5d-4e44-a59b-153ea50a181e","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"asset":"BTC","currency":"native","exchange":"aggregated","metricCode":"indicators.HashRibbon","resolution":"24h","movingMedian":0,"movingAverage":0,"expMovingAverage":0},"uuid":"8f5f0924-6742-46f0-a94d-420dff626a81","extra":{"zoom":"5y","price":true,"scale":"lin","lineColor":"#f7931a","chartStyle":"line","logTickInterval":1},"configType":"metric"},{"meta":{"content":"# Tracking Miner Capitulation Risk ⛏️\n\n---\n\nMiners are the production side of Bitcoin, and their business is cyclical, hyper-competitive, and experiences booms and busts along with coin prices.\n\nDuring bear markets, these busts can often help track when miners must liquidate a larger portion of their BTC income, and treasuries, and when a complete de-leveraging has taken place. We can also identify periods when recovery is underway, and storm clouds are clearing.\n\nThe tools in this dashboard provide insight into the following:\n- Trends in mining hashrate boom/bust cycles.\n- Models to estimate BTC cost of production.\n- Analysis of implied miner income stress.\n- Risk of miner capitulation."},"uuid":"5f9b6428-8414-4084-904c-5e67725d60ef","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"### Disclaimer\n\n---\n\n*This dashboard and associated content does not provide any investment advice. All data is provided for information purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. For for details, please refer to our [Terms and Conditions](https://studio.glassnode.com/terms-and-conditions).*\n\n---\n### Further References Information\n\n1. [Puell Multiple Academy Guide](https://academy.glassnode.com/indicators/coin-issuance/puell-multiple) presents a comprehensive guide to miner boom and bust cycles.\n2. Miner Capitulation Risk metric was presented in [The Week On-chain Week 25, 2022 Newsletter](https://insights.glassnode.com/the-week-on-chain-week-25-2022/)\n3. A suite of mining related metrics were covered in [The Week On-chain Week 40, 2022 Newsletter](https://insights.glassnode.com/the-week-onchain-week-40-2022/).\n"},"uuid":"20416d65-6c00-481e-8102-974fbd2cee6b","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"asset":"BTC","currency":"native","metricCode":"indicators.PuellMultiple","resolution":"24h"},"uuid":"e5dddb08-643d-455a-805e-70f7a6b75929","extra":{"zoom":"5y","price":true,"scale":"log","lineColor":"#f7931a","chartStyle":"line"},"configType":"metric"},{"meta":{"content":"# The Puell Multiple\n\n---\n\nA principal dimension of determining the severity of a bear market is to explore the extent of decline in miner incomes. The **Puell Multiple** is the ratio of the daily miner income (in USD) to the yearly average. This metric helps to establish periods where miner incomes are in extreme profit, or likely to be distressed.\n\n- **Puell Multiple \u003e 4.0** indicates miners are currently earning 400% of their yearly average, and are thus very profitable (creating an incentive to liquidate coins into market strength).\n\n- **Puell Multiple \u003c 0.6** indicates miners are earning 60% their yearly average, and are increasingly unprofitable, and potentially experiencing income stress (creating an incentive to liquidate coins to shore up balance sheets).\n\n### Interpretation Guide\n\nDuring a bear market, two distinct phases can be identified:\n\n- **Early Bear Market:**  the Puell Multiple typically falls towards ~0.6, indicating miner incomes have declined up to 40% relative to the yearly average.\n\n- **Miner Capitulation:**  in the later stages of a prolonged bear market, where miner capitulation events tend to take place, the Puell Multiple has historically fallen below sub-0.6 range (often coincident with a negative inversion of the hash ribbons).\n\n\u003e 💡 Hint: The [Puell Multple guide on Glassnode Academy](https://academy.glassnode.com/indicators/coin-issuance/puell-multiple) has a detailed explanation of Bitcoin mining cycles for further reference."},"uuid":"da2d6428-5158-4a3f-b3e0-99a0c4c0aafc","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"asset":"BTC","miner":"aggregated","mathFn":{"name":"sma","value":"7"},"currency":"native","exchange":"aggregated","exchangeTo":"aggregated","metricCode":"mining.HashRateMean","resolution":"24h","exchangeFrom":"aggregated","movingMedian":0,"movingAverage":"7","expMovingAverage":0},"uuid":"45e73ebe-6f9b-4f60-8339-5147c3ddfb33","extra":{"zoom":"5y","price":true,"scale":"lin","lineColor":"#f7931a","chartStyle":"line"},"configType":"metric"},{"meta":{"refUuid":"58ed9130-cf15-46de-7254-e5385b4b9ea0"},"uuid":"c3d64fa3-bf18-4198-892b-7380d76937c8","extra":{"zoom":"5y"},"configType":"workbench"},{"meta":{"content":"# Difficulty per Issuance Model\n\n---\n\nAnother framework for evaluating the cost of production is by fitting a non linear relationship between the cost of production, and the input parameters of Difficulty, and Issuance.\n\nThis model seeks to capture the point of maximum miner efficiency, being at the bottom of bear markets when only the strongest miner balance sheets and operations are profitable.\n\nThree traces are shown:\n\n- 🔴 **Current Estimate Cost of Production** which estimates the lower bound cost of production, associated with the most efficient miners. It is fitted to the lows of historical bear market capitulations.\n\n- 🟣 **Post Halving Cost of Production** which estimates the most efficient cost of production after the net halving (assuming constant difficulty).\n\n- 🟠 **Geometric mean of the two aforementioned traces** providing an estimate of the typical miner cost of production, and a price which may trigger acute miner income stress.\n\n### PoW Model Oscillator 🔵\n\nThis oscillator reflects the premium or discount multiple of the current spot price ⚫ to the most efficient miner cost of production 🔴."},"uuid":"0ad310f0-147a-4941-b342-e4b2e7fbb05c","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"refUuid":"ed3566b6-a2d0-4c90-71fd-661ddedeea9c"},"uuid":"36558f5e-2b31-49af-9bc5-928dc75923c7","extra":{"zoom":"5y"},"configType":"workbench"},{"meta":{"content":"# Assessing Mining Revenues\n\n---\n\nThis metric plots the total daily USD revenue 🟠 paid to Bitcoin miners, and compares it to the 365-day simple moving average 🔵. This helps analysts gauge daily volatility against the longer term trend, and shows the input components to the [Puell Multiple oscillator](https://academy.glassnode.com/indicators/coin-issuance/puell-multiple).\n\nAlso shown is the rolling 365-day sum of miner revenues 🟣 to assess aggregate industry income."},"uuid":"5c568d19-bee7-417b-80df-1ea6c656420e","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"refUuid":"a5d2d72d-32d0-4d4a-49e4-9664f89fd7af"},"uuid":"fd6738d7-ba50-4501-9933-bfc7570862e1","extra":{"zoom":"5y"},"configType":"workbench"},{"meta":{"refUuid":"cb9114b7-d8c2-4474-7cd1-3c38f7b133f2"},"uuid":"d5de9889-5e36-4c3b-b36c-99eba6f3e2c1","extra":{"zoom":"All"},"configType":"workbench"},{"meta":{"content":"# Hash Price (Revenue per Exahash)\n\n---\n\nMiner revenue per Exahash is a metric for estimating daily miner incomes, relative to their estimated contribution to network hash-power. It is calculated by taking the ratio between total USD or BTC denominated miner income (subsidy and fees), and dividing by the current hash-rate (in EH/s).\n\nData is presented in daily resolution, and thus traces display the daily revenue per 1 EH/s of hashpower a miner provides to the network.\n\nAs hashpower competition increases, hash price will decline, indicating that the revenue [BTC or USD] earned per hash is decreasing. A lower hash price indicates a higher average cost of production."},"uuid":"4032a74d-a474-4fbc-97b7-a49a6e3879e1","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"content":"# Percent Mined Supply Spent\n\n---\n\nThis metric provides an estimate of the percent of mined supply which is spent by the mining cohort over a 30-day window. Due to the competitive, and capital intensive nature of the mining industry, miners have historically needed to distribute a majority of the coins mined to cover input costs.\n\nThe model compares the 30-day change in miner balance, to the 30-day total issuance in order to assess the proportion of mined coins that are spent in aggregate.\n\n- **Values = 100%** indicate that in aggregate, a volume of coins equal to the total mined supply was spent.\n\n- **Values \u003c 100%** indicate that miners are retaining a portion of mined supply in treasury reserves.\n\n- **Values \u003e 100%** indicate that miners are distributing coins in excess of the mined supply, and are thus depleting treasury reserves."},"uuid":"36aa39d7-44ae-498a-b000-b33d97f11634","extra":{"backgroundColor":"#ffffff"},"configType":"content"},{"meta":{"refUuid":"c27227f4-506f-4bde-49b4-1e0d80150dd1"},"uuid":"d5716900-f1ee-43b4-b6b7-8f2e8ac5d795","extra":{"zoom":"5y"},"configType":"workbench"}],"layouts":[{"h":8,"i":"268dfd71-c4ff-4da3-af68-2f8fa5d6d8c3","w":8,"x":4,"y":56,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"e3811e09-19dd-4f72-825c-db1aae41719f","w":4,"x":0,"y":16,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"b87276fe-2d6b-4996-bf81-a3afa98c2ad1","w":4,"x":0,"y":8,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"f28999b2-ab5d-4e44-a59b-153ea50a181e","w":4,"x":0,"y":56,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"8f5f0924-6742-46f0-a94d-420dff626a81","w":8,"x":4,"y":8,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"5f9b6428-8414-4084-904c-5e67725d60ef","w":4,"x":0,"y":0,"minH":1,"minW":3,"moved":false,"static":false},{"h":4,"i":"20416d65-6c00-481e-8102-974fbd2cee6b","w":12,"x":0,"y":72,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"e5dddb08-643d-455a-805e-70f7a6b75929","w":8,"x":4,"y":48,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"da2d6428-5158-4a3f-b3e0-99a0c4c0aafc","w":4,"x":0,"y":48,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"45e73ebe-6f9b-4f60-8339-5147c3ddfb33","w":8,"x":4,"y":0,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"c3d64fa3-bf18-4198-892b-7380d76937c8","w":8,"x":4,"y":24,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"0ad310f0-147a-4941-b342-e4b2e7fbb05c","w":4,"x":0,"y":24,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"36558f5e-2b31-49af-9bc5-928dc75923c7","w":8,"x":4,"y":32,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"5c568d19-bee7-417b-80df-1ea6c656420e","w":4,"x":0,"y":32,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"fd6738d7-ba50-4501-9933-bfc7570862e1","w":8,"x":4,"y":64,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"d5de9889-5e36-4c3b-b36c-99eba6f3e2c1","w":8,"x":4,"y":40,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"4032a74d-a474-4fbc-97b7-a49a6e3879e1","w":4,"x":0,"y":40,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"36aa39d7-44ae-498a-b000-b33d97f11634","w":4,"x":0,"y":64,"minH":1,"minW":3,"moved":false,"static":false},{"h":8,"i":"d5716900-f1ee-43b4-b6b7-8f2e8ac5d795","w":8,"x":4,"y":16,"minH":1,"minW":3,"moved":false,"static":false}]}}