One research on-Chain, published by Kraken Intelligence, highlighted the cumulative behavior of ETH miners, even though they were released after a major network upgrade on Aug.
Miners have amassed an additional 2 million ETH worth $ 6.1 billion after activating the London hard fork. The recent accumulation has pushed miners’ net ETH holdings to an all-time high of 22.3 million ETH (valued at nearly $ 70 billion), which is nearly 19% of total ETH supply.
The Kraken Report Says:
“ETH accumulation stagnated for most of the summer before accelerating in July, even though ETH price was trending down. However, the miners increased their ETH accumulation according to EIP-1559 because they recognized the inflation-reducing effect of the upgrade to increase the price. “
The supply of ETH that is held by miners | Source: Kraken Intelligence, Coin Metrics
EIP-1559 was launched in conjunction with the London Hard Fork on August 5th and split the transaction fee (calculated in Ethereum’s native token, ETH) into two parts: the basic fee and the priority fee.
The network is starting to charge a base fee for adding transactions to Ethereum blocks. It also introduced preferential fees – or voluntary tips – that Ethereum users pay to miners to expedite transactions.
On the other hand, EIP-1559 has changed the way the Ethereum token economy works by introducing a fee-burning mechanism. The suggestion for improvement triggered a basic fee burn and thus made the ETH a deflationary asset, as part of the offer was permanently withdrawn from circulation.
Burning some of the total fee income also means reducing the income of the Ethereum miners. As a result, the launch of the EIP-1559 sparked warnings of lower profitability in mining, with one study showing a 15% drop in miners’ income by 15% shortly after the launch of EIP-1559.
But that didn’t stop them from increasing their exposure to Ethereum as the hashrate hit a record high of 736.67 TH / s on September 23rd.
Hashrate performance of the Ethereum network over the past 12 months | Source: YCharts
It should be noted that Ethereum mining had previously slumped after China’s crypto breakthrough in May, causing the hash rate to drop to a three-month low of 477.54 TH / s. Kraken wrote:
“This tells us that not only is the response to China’s crackdown on the line, but that the miners see the latest upgrade as a general boon to Ethereum that is far more valuable than anything else.
NFT is booming and is sticking to the mining boom, which is driving the mood
Ethereum miners survived the FUD EIP-1559 mainly due to the rising ETH price and high network demand due to the NFT boom.
Kraken noted that miners’ earnings hit a nearly 4-month high of $ 70 million on September 7, a 27% increase in one month after the August 5 upgrade due to “NFT activity in projects” . Drive priority fees higher. “
Ethereum Miner Revenue | Source: Kraken Intelligence, Coin Metrics
But the recent decline in the NFT sector due to the decline in daily active users (-23%), trading volume (-83%) and transaction volume (-31%) has also increased sales.
However, the amount of ETH held by miners has risen to its highest level yet, leading Kraken to conclude that they are accumulating ETH tokens and the ETH tokens become validators for the upcoming PoS Ethereum chain, the Ethereum 2.0 is called.
Users need to bring 32 ETH into the Ethereum 2.0 smart contract to become a validator on the network. In return, they can earn an APR of up to 5%. As of September 29, ETH 2.0 had attracted 7.813 million ETH worth $ 2.85 billion from 48,780 individual depositors, according to data from CryptoQuant.
With more ETH in the meantime leaving the active supply due to staking and EIP-1559 activation, the prospect of holding ETH could benefit miners due to the classic supply and demand model.
Lark Davis was tweets:
“With EIP 1559, ETH supply will likely peak at around 120 million and then decrease as demand increases. That almost certainly means that the numbers will increase. “
ETH is currently trading at $ 3,006 at press time, up over 300% year over year.
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According to Cointelegraph