Bitcoin [BTC]: Silver lining for miners as fees exceed 2021 levels, more inside
- The gap between daily mining revenue and the 365-day SMA has widened since the start of 2023.
- There were cases of transaction fees exceeding the block rewards given to miners.
While the increasing congestion on Bitcoin [BTC] network may have alarmed purists and affected users who now have to wait for longer periods to have their transactions validated, BTC miners have been laughing all the way to the bank.
Read Bitcoins [BTC] Price prediction 2023-24
According to a data scientist from research firm Glassnode, miners earned about $17.7 million through transaction fees on May 8. This was higher than what they were at the peak of the bull market in 2021. Although fees fell on May 9 to $12.15 million due to measures taken to reduce congestion, the overall impact on miner income was huge.
Happy #bitcoin miners.
$17.7 million earned through transaction fees – in a single day.
— Rafael Schultze-Kraft (@n3ocortex) 9 May 2023
Miners strike gold
A better way to look at BTC miners’ increasing profitability was by comparing the total daily income earned by miners to the 365-day simple moving average. The chart below suggests that the divergence between the two has widened since the start of 2023, with the difference reaching $17.15 million on May 9.
Source: Glassnode
In the last 24 hours, miner earnings exceeded 31%. On 8 May, the share had shot up to 42%. This indicated a positive shift that stood in stark contrast to the violence miners endured during the 2022 bear market.
Source: Glassnode
Miners must be motivated to participate in validating transactions and securing the Bitcoin network. The incentives come in the form of two methods: block rewards and transaction fees. While the former is becoming less lucrative as rewards gradually decrease every four years, more miners are enjoying the idea of increased transaction fees.
In fact, for the first time since 2017, transaction fees for a single block exceeded the block rewards given to miners according to a tweet from an analyst.
BREAKING: #Bitcoin block 788695 contained transaction fees that were greater than the block grant.
6.7 BTC transaction fees + 6.25 BTC subsidy
This is the first time in history this has happened due to competitively high demand for block space. pic.twitter.com/J7IcwzIVKE
— Joe Burnett (🔑)³ (@IIICapital) 7 May 2023
Steps to combat congestion
Meanwhile, faced with an increasing transaction deadlock, core developer Ali Sherief suggested adding a runtime option that will immediately eliminate all unusual Taproot transactions, according to a tweet by popular journalist Colin Wu. However, popular consensus could not be built on the same.
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Network traffic increased mainly due to transactions with taproot addresses. On May 9, 66% of all transactions on Bitcoin used Taproot.
Source: Glassnode
Due to the congestion concerns, BTC failed to break through the $28k level, trading at $27,639.89 at the time of writing, data from CoinMarketCap showed. According to Santiment, BTC’s funding rate reversed negative on the crypto exchange BitMEX, which indicates that several investors were positioned for price losses.
