> For the complete documentation index, see [llms.txt](https://docs.blockhorizon.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.blockhorizon.io/chart-tutorials/price-and-valuation/thermocap.md).

# Thermocap

## Thermocap Indicator

The Thermocap indicator measures the cumulative earnings of miners from block rewards since the inception of a cryptocurrency. This metric provides insights into the cost of securing the network, miner profitability, and the relationship between market capitalization and miner incentives.

## Steps to Use the Thermocap Indicator

1\. Understand the Concept:

* Thermocap: The total sum of block rewards earned by miners over time, expressed in the cryptocurrency’s native units.
* Relevance: Reflects the total historical cost of securing the network and the cumulative rewards distributed to miners.

2\. Interpret the Thermocap Indicator:

* High Thermocap: Indicates a significant amount of miner rewards have been distributed, reflecting network growth and longevity.
* Low Thermocap: Suggests a relatively new or low-reward network, with lower historical mining costs.
* Trends Over Time: Analyze thermocap growth to assess the relationship between network security costs and market value.

3\. Analyze Historical Patterns:

* Network Maturity: Older networks with longer mining histories typically have higher thermocap values.
* Bull Markets: The growth of thermocap may accelerate as more rewards are distributed during high activity periods.
* Halving Events: The rate of thermocap growth may slow after halvings due to reduced block rewards.

4\. Make Decisions:

* During High Thermocap Periods: Evaluate the sustainability of miner incentives and the relationship between thermocap and market capitalization.
* During Low Thermocap Periods: Consider the implications for network security in newer or lower-reward networks.
* Validate Network Health: Use this metric alongside other indicators to confirm trends in network security and miner profitability.

## Tips:

* Combine with Market Cap: Analyze the ratio of market cap to thermocap to evaluate market valuation relative to network security costs.
* Monitor Historical Trends: Compare thermocap growth over time with network milestones and market cycles.
* Account for External Factors: Consider regulatory changes, energy prices, and technological advancements influencing mining costs.
* Use with Miner Revenue: Pair thermocap data with miner revenue metrics to assess long-term miner profitability.

## How to Use the Indicator Effectively

* Assess Network Security Costs: Use thermocap trends to evaluate the cumulative cost of maintaining network security.
* Identify Market Cycles: Monitor changes in thermocap growth relative to market capitalization to detect valuation trends.
* Support Strategic Decisions: Incorporate insights from this indicator into network evaluations, investment strategies, and miner behavior models.

## Created By Rafael Schultze-Kraft