Bitcoin Miners Party As Revenue Spikes To Historical Levels
On-chain data shows that Bitcoin miners are making 12.4% of their income from fees after transaction counts reached an all-time high.
Bitcoin miner revenue share of transaction fees has increased recently
According to data from on-chain analytics firm glassnodeonly 254 trading days in the entire history of the cryptocurrency have seen transaction fees contribute a larger share of these chain validators’ total revenue.
There are mainly two components to the revenue that miners generate: block rewards and transaction fees. Block rewards are what this group receives as compensation for mining blocks on the Bitcoin network. These rewards always have a fixed amount, with the exception of halving events, after which they are permanently cut in half.
Transaction fees, on the other hand, can be highly variable, as it is up to blockchain users to attach whatever amount they see fit. Generally, during periods of relatively low network traffic, rates remain low. This is because there is enough capacity on the chain for your transfer to go through relatively quickly, even at low rates.
However, things are different when the network becomes active. Miners can only handle a limited amount of transactions at once, so they start to prioritize transfers with a higher amount of fees. To compete with other users in getting faster transactions, senders start charging high fees.
In times like these, average fees can naturally increase and therefore the percentage of miner revenue they offset increases. Recently, these market conditions have formed again.
The chart below shows how current percentage revenue from fees for miners compares to levels seen throughout Bitcoin’s history.
The value of the metric seems to have been pretty high in recent days | Source: Glassnode on Twitter
As displayed in the chart above, Bitcoin miner revenue from transaction fees has seen a fairly large increase recently. These high fees came as the total number of transactions on the network reached a new all-time high.
The source of this sudden volume of transfers seems to be mainly because of the explosion in popularity of “Subscriptions”, BTC technology similar to Non-Fungible Tokens (NFTs) on other blockchains. In particular, text-based subscriptions have been in very high demand recently.
As a result of this high activity on the network, fees now account for 12.4% of miners’ revenue. In the graph, it is visible that there were very few instances in which the metric showed peaks of greater magnitude.
To be precise, only 254 trading days in the cryptocurrency’s entire history (or 4.9% of the asset’s trading lifetime) have seen miners rake in a higher percentage of revenue from fees, showing how rare this situation is. Certainly, miners would be receptive to this development induced by the Inscriptions.
BTC price
At the time of writing, Bitcoin is trading around $29,000, down 1% over the past week.
Looks like the value of the asset has been moving sideways recently | Source: BTCUSD on TradingView
Featured Image by Brian Wangenheim at Unsplash.com, Charts by TradingView.com, Glassnode.com