Bitrabo Editorial
New data reveals that Bitcoin miners are earning 90% less in revenue from transaction fees as the hype around BRC-20 tokens dies down.
Bitcoin Miners’ Transaction Fee Earnings Drop to $1.7 Million
Bitcoin miners generate revenue in two ways: block rewards for solving blocks on the network and transaction fees for handling individual transfers. Over the past few years, the revenue from transaction fees has been relatively small, and miners have relied solely on block rewards for income.
More recently, however, miners have seen a surge in transaction fee revenue due to the popularity of BRC-20 tokens on the market.
Transaction fees are typically low when the blockchain experiences little traffic, as investors see no need to attach higher fees to have their transactions processed faster. During periods of high congestion, however, competition for transfers increases, with miners prioritizing transactions with the highest fees. This raises transaction fees as senders try to outbid others to have their transfers processed first.
BRC-20 tokens are fungible tokens created on the Bitcoin blockchain using the Ordinals protocol that have gained popularity over the past few months. Their popularity has caused a surge in transactions on the network, leading to congestion and a subsequent increase in fees. At its peak, miners earned historically high fees from transactions.
According to data from on-chain analytics firm Glassnode, fees have significantly declined since the hype around BRC-20 tokens has subsided. The chart below shows the trend in Bitcoin transaction fees:
The indicator value has decreased significantly in recent days | Source: Glassnode on Twitter
The chart indicates that Bitcoin’s transaction fees reached $17.8 million at the height of BRC-20 token popularity, which is an extraordinary figure. Only two days in the cryptocurrency’s history recorded higher values, both of which occurred during the 2018 peak.
Now, after the BRC-20 token craze has died down, miners generate only $1.7 million in transaction fee revenue. Although this is a significant drop from their earlier earnings, the current values are still considerable when compared to normal levels. For reference, only 310 out of the blockchain’s 4,624 trading days (or 6.7% of active trading days) have seen higher transaction fee earnings.
BTC Price
As of writing, Bitcoin is trading at around $27,900, up 2% in the last week.
The asset appears to be recovering | Source: BTCUSD on TradingView
Featured image from Dmitry Demidko on Unsplash, charts from TradingView and Glassnode.