Stock to Income

Inspired by stocktoincome.com

Simple Explanation of Stock to Income

The Bitcoin Stock to Income model is based on the Stock to Flow model, with two major differences:

1. Stock to flow does NOT account for transaction fees earned by miners, only new bitcoins. Stock to income includes miner fees in flow.
2. Stock to flow only used data until March 2019, which is when it came out. Stock to income is re-generated daily, ensuring an accurate model.

Stock to income aims to paint a more accurate projection of the Bitcoin price, using current data and accounting for miners transaction fees earned as flow.

Video Explanation

Advanced explanation of stock to income model

The Stock to Income model compares the total stock of Bitcoin against the miner's total income, which consists of the subsidy (reward for mining) and fees for transactions.

Stock to flow does NOT consider transaction fees.

The logic that leans towards including fees, says the following:

While the fees earned by miners are technically from existing bitcoins, there is a higher chance miners will sell compared to a user or HODLer that owned the bitcoins before

Thus, BTC selling pressure can be put on the Bitcoin price from transactions fees paid to miners.

It's also essential to include fees in the calculation since over time, the block subsidy (reward) will become less and less important for miners, and block fees will become their primary source of income.

Data Used in the Model

Fees - The model uses a moving average for the last 365 days to calculate the average subsidy and fees per day.

Future Fees - For future calculations, it assumes that fees will be the same as their average in the last 365 days.

Stock - The Stock to Income model considers stock to be the number of active coins in the last ten years. This is because many Bitcoins were lost during the first few years of its existence due to its insignificant value at the time. Bitcoin users were losing or forgetting their keys, and once that happens, those coins can be considered non-existent and make no sense to include them as stock.