Revenue realized from Bitcoin mining activity realized an unprecedented surge, replicating the high levels witnessed in May 2023. The mining revenues increased in May, driven by rising demand for the Ordinals inscriptions that flooded the network.
The rise in Bitcoin mining revenue coincided with the uptrend realized by cryptocurrencies princes in the past week. A glance at the market activity shows the majority of the cryptocurrencies have gained bullish steam.
Looming Approval of Bitcoin ETF Trigger Mining Revenue Spike
The uptrend is fueled by the looming approval of the spot Bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC). A review of Blockchain.com data shows that Bitcoin mining realized $42.293 million in earnings on Saturday, November 11. The amount surpassed the previous high of $41.744 attained on May 8 during the Ordinals craze.
The surge realized by mining revenue coincides with Bitcoin’s price rally to exchange above $37000 on Thursday, November 9. The uptick is driven by the mounting anticipation portrayed by the investment community on the likely approval of the spot Bitcoin ETF by the Gary Gensler-led SEC.
At press time, 08:36 UTC, Bitcoin is exchanging hands at $37,139.46, representing a 0.26% increase in the day and a 5.49% weekly gain. Blockchain.com President Lane Kasselman indicated that Bitcoin mining revenue is driven by two factors – Bitcoin price and increased network activity.
Kasselman observed that a busier network implies that more people are utilizing the platform, thereby also incurring higher fees to execute transactions. The executive explains that the situation contrasts with the May experience.
While Bitcoin price failed to hit exceptionally high levels, network congestion offered a significant boost to the miners’ revenue. Nonetheless, Kasselman notes that the present earnings spike arises from the surging Bitcoin prices.
Kasselman attributes the network congestion witnessed in May to the increased demand for the Ordinals. He added that ordinal inscriptions match nonfungible tokens (NFTs) in nature by allowing users to inscribe digital assets on the Bitcoin blockchain. Notably, the miner revenue rose to $40 million daily while the Bitcoin price hovered around $27000.
Is Bitcoin Mining Revenue Rally Sustainable?
The rally witnessed in Bitcoin’s price is attributed to the optimism demonstrated regarding potential Bitcoin ETF approval by the securities watchdog. The optimistic projection arises from the deadlines’ expiry to offer rebuttal comments regarding the dozen ETF applications. The process resulted in a brief window that the SEC could approve the 12 bids simultaneously.
The optimism witnessed in the digital assets ecosystem emerged shortly after the November 8 publication by CoinDesk, revealing that the SEC opened talks with the representatives from digital asset manager Grayscale Investments. The conversation involves the firm’s attempt to convert Grayscale Bitcoin Trust (GBTC) into the spot Bitcoin ETF.
SEC-Grayscale conversations arise from the Court of Appeals directive to the Gensler-led regulator to review the pending application. The US appellate judge labeled SEC’s conduct as portraying arbitrary and capricious actions.
Bitcoin ETF to Facilitate Institutional Acceptance of Cryptocurrency Assets
The SEC has in the past repeatedly denied approving spot Bitcoin ETF, citing vulnerability to price manipulation. The explanation arises from the awareness that an ETF involves an investment vehicle that tracks the underlying asset’s performance.
Market observers consider approving the spot Bitcoin ETF a critical milestone toward institutional acceptance of digital assets. They project that it would allow US investors to secure indirect exposure to the digital assets market while averting the risk of holding the crypto asset.
Various hedge funds joined investment firms in submitting applications for spot Bitcoin ETF. However, the journey traces to mid-2023 when the global largest asset manager, BlackRock, submitted an ETF application.
The application by Larry Fink-led BlackRock fueled the surge in Bitcoin price currently witnessed as the approval date nears. A recent publication by JPMorgan analysts predicted that the SEC could approve the spot Bitcoin ETF by January 2024.
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