The Puell Multiple

The Puell Multiple graph which is showing relation between BTC mined in a day (expressed in USD) and 365 day simple average. More information can be found here: The Puell Multiple

Puell Multiple Explained

The Puell Multiple is a market metric for estimating the level of sell pressure in the market coming from miners.

Historically, mining revenue primarily consisted of block subsidies awarded to a miner for finding a block. The USD value of that subsidy changes on a daily basis as the price of bitcoin changes.

Traders found it useful to consider the value of the block subsidy to determine what sorts of pressures miners faced to sell these rewards to continue operations, since forced sellers in a market tend to bring down price.

Enter David Puell.

The issue with only looking at the daily miner revenue is that it does not tell you how healthy that revenue is over a period of time. So Puell developed the Puell Multiple.

Early Version of Puell Multiple

Initially, the multiple was calculated by taking the daily coin issuance and dividing it by the previous year’s daily moving average of coin issuance.

Updated Puell Multiple

In the beginning, fees were a negligible part of a miner’s revenue. As bitcoin gained adoption though, the blockchain mempool filled up, creating a competitive fee market. These fees began to account for a larger and larger portion of miner’s total revenue. These days, fees are no longer an insignificant part of miner revenue, so Puell changed the theorem to include them. Now, Puell uses miner revenue instead of just coin issuance to calculate the multiple.

Potential Utility of Puell Multiple

With the Puell Multiple, a trader can quickly derive a single value that captures how healthy miner revenue is on any given day compared to all the other previous days in a year. A high Puell multiple might suggest that there is not very much sell pressure among miners. A low Puell multiple might suggest that there is considerable sell pressure among miners. Since miners have access to so much bitcoin, understanding what their pressure to sell is might suggest where the price is headed in the short term.