Bitcoin Miners Not Selling Despite Record Fees: Data
Bitcoin miners have been raking in historically high amounts of transaction fees recently, but on-chain data shows that this group is still not selling.
Bitcoin miners haven’t transferred much volume to exchanges recently
Transaction fees on the Bitcoin network have skyrocketed recently because of increased traffic caused by Ordinals, a protocol that allows data to be entered into the Bitcoin blockchain with transactions.
Generally, transaction fees remain low during periods when there is little activity on the blockchain, as investors do not have to pay higher fees to obtain transfers quickly.
However, when the network is congested, wait times in the mempool can extend longer, so senders who want their transfers processed faster incur a hefty amount of fees. This gives miners an incentive to handle these transfers first.
There has been some extraordinary congestion on the blockchain recently, so it is not a surprise that transaction fees have risen to quite high levels, as the graph below shows. Rafael Schulze Kraftthe co-founder of Glassnode, displays.
The value of the metric seems to have been quite high in recent days | Source: Rafael Schultze-Kraft on Twitter
As shown in the chart above, Bitcoin transaction fees skyrocketed to $17.7 million recently, which is an extremely high figure even when compared to the height of the last few bull runs.
The main reason behind this increase was the increase in the use of Ordinals. In particular, the rise in popularity of BRC-20 tokens, fungible tokens that were created using the Ordinals protocol, has been at the heart of this activity. Many meme coins have emerged based on this protocol, including the explosively popular Pepe Coin (PEPE).
From the graph, it is visible that only the 2017 bull run saw the total transaction fees on the blockchain reach higher values. The first half of the 2021 bull run saw similar levels, but still slightly lower than the current peak.
Naturally, miners are taking advantage of the explosion of activity seen on the network right now, as transaction fees represent one of the two main revenue streams for these chain validators (the other being block rewards).
In such a period of booming business, there could be concerns about whether miners would sell some of their reserves here to realize these high revenues. But so far, the transaction volume of miners going to centralized exchanges has remained low, according to the graph shared by Mitchell from Blockware Solutions.
Looks like the value of the metric has stayed low recently | Source: MitchellHODL on Twitter
Typically, these investors transfer their coins to exchanges whenever they want to participate in the distribution of the asset. As they haven’t sent any suspicious amounts to these platforms recently, it’s possible that they don’t intend to sell their Bitcoin just yet.
This could be a positive sign for the market, as it could mean that this BTC pool has decided to accumulate the extra revenue it has been receiving lately.
BTC price
At the time of writing, Bitcoin is trading around $27,600, down 4% over the past week.
BTC has observed some decline in the last few days | Source: BTCUSD on TradingView
Featured Image from iStock.com, Charts from TradingView.com, Glassnode.com