An on-chain study published by Kraken Intelligence shows strong cumulative behavior among Ethereum miners, even when faced with the prospect of lower revenue generation after a major network upgrade on May 5, 2021.

Ethereum miners have accumulated an additional 2 million ethers (ETH) worth 6.1 billion US dollars after activating the so-called London Hard Fork. The latest accumulation has brought miners’ net ether holdings to an all-time high of 22.3 million ETH (valued at nearly $ 70 billion), which is nearly 19% of total ether supply.

The Kraken report states, “ETH accumulation stagnated for most of the summer before accelerating in July, even though ETH price was trending down.”

“However, the accumulation of ETH among miners actually took place after EIP-1559 as they could see the deflationary effect of the upgrade to increase the price.”

Miner babbles EIP-1559 FUD

EIP-1559, which went live on August 5th in conjunction with the London Hard Fork, split the transaction fee (chargeable via ETH native token) into two parts: basic fee and priority fee.

The network is starting to charge a base fee for adding transactions to Ethereum blocks. Meanwhile, priority fees – or voluntary tips – have been introduced that Ethereum users pay miners to speed up transactions.

But EIP-1559 changed the way the Ethereum token economy works by introducing a fee-burning mechanism. The suggestion for improvement thus initiates the burning of basic fees and thus makes ETH a deflationary asset by permanently withdrawing part of its offer from circulation.

Burning some of the total fees also means a decrease in revenue for the Ethereum miners. As a result, the launch of EIP-1559 has raised alarms about reduced mining capacity, with a study showing that miners’ revenues fell 15% immediately after EIP-1559 went live.

But that hasn’t stopped miners from increasing their exposure to the Ethereum market, where ETH’s hash rate hit a record high of 736.67 terra hash per second (TH / s) on May 23.

This is despite the decline in Ethereum mining activity following China’s crypto breakthrough in May, which subsequently drove the hash rate to a three-month low of 477.54 TH / s. Kraken wrote:

“This tells us that not only has the response to China’s crackdown on cracks been exaggerated, but that miners see the latest upgrade as a general boon to ETH that far outweighs the reduction in rewards for miners.”

NFT boom that boosts the mood behind the mining boom

Ethereum miners survived the EIP-1559 FUD mainly due to the rising ETH price and high network demand, which led to a boom in the unavailable tokens (NFT) space.

Kraken found that miners’ earnings hit a nearly 4-month high of $ 70 million on September 7, a 27% increase per month after upgrading from 5th fees. “

But the recent decline in the NFT sector, led by a sharp correction in daily active users (-23%), trading volume (83%) and transaction volume (-31%), has also depressed miners’ revenues.

However, the amount of ETH miners hold has soared to its highest level yet, leading Kraken to conclude that they are accumulating and mining Ether tokens to become validators in Ethereum’s proof-of-stake chain.

Users have to put 32 ETH on Ethereum 2.0 smart contracts to become validators on their network. In return, they can earn an APR of up to 5%. By September 29, ETH 2.0 had attracted 7,813 million ETH worth $ 2.85 billion from 48,780 individual depositors, according to CryptoQuant.

Related: Ethereum Balances on Crypto Exchanges Hit New Low As ETH Price Rises $ 3,000

Since in the meantime many Ether tokens no longer have an active supply due to staking and EIP-1559 activation, the prospect of holding ETH could benefit the miners due to the classic supply-demand model.

With EIP 1559 #Ether Supply is expected to peak at around 120 million, then it will continue to decline as demand increases. That almost certainly means the numbers will go up.

– Lark Davis (@TheCryptoLark) September 24, 2021

Ether is trading at $ 3,006 at press time, up more than 300% to date.