Thermocap
An on-chain valuation metric summing the total cumulative revenue ever paid to miners, used as a rough proxy for the network's total historical security spending.
Thermocap is an on-chain metric calculated by summing the total cumulative revenue ever paid out to miners over a network's entire history — including both block subsidies and transaction fees, valued in dollar terms at the time each payment occurred — used as a rough proxy for the total amount of real-world capital that's ever been spent securing the network through proof-of-work (see Kaavon's "Proof of Work" glossary definition) mining.
Thermocap is sometimes compared against a network's market capitalization to construct ratios intended to gauge whether the market's current valuation looks stretched relative to the network's cumulative "security spend" to date, on the theory that a network's value should bear some relationship to how much has genuinely been spent defending it. Like other metrics built from historical mining revenue, such as hash rate (see Kaavon's "Hash Rate" glossary definition) trends, thermocap reflects a specific, debatable theoretical framework for valuation rather than a definitive or universally accepted measure of fair value.
Examples
- A market-cap-to-thermocap ratio well above its historical norm has sometimes been cited by analysts as a sign that a network's valuation looks stretched relative to its cumulative historical security spending.
- Thermocap only accounts for mining revenue, which is one specific, debatable framework for thinking about valuation rather than a comprehensive or universally accepted measure.