Bitcoin Miners Party As Earnings Peak To Historic Levels
On-chain data shows that Bitcoin miners earn 12.4% of their revenue from fees after the number of transactions hit an all-time high.
Bitcoin Miner revenue share of transaction fees has been rising lately
According to data from the analysis company at the chain Glass nodeonly 254 trading days in the entire history of the cryptocurrency have seen transaction fees contribute a larger share of the total revenue of these chain validators.
There are mainly two components to the revenue that miners generate: the block rewards and the transaction fees. The block rewards are what this cohort receives as compensation for mining blocks on the Bitcoin network. These rewards always have a fixed value, with the exception of the halving events, which are then permanently cut in half.
Transaction fees, on the other hand, can be highly variable, as it is up to the users of the blockchain to attach as much amount as they see fit. Generally, during periods of relatively low online traffic, fees remain low. This is because there is enough capacity on the chain for their transfer to go through relatively quickly even with low fees.
But things will be different when the network becomes active. Miners can only handle a limited number of transactions at once, so they start prioritizing transfers with a larger amount. In order to compete with other users to get the transactions through faster, senders are starting to attach high fees.
In times like these, average fees can naturally rise, and thus the percentage of miner earnings that they make up for increases. Recently, such market conditions have again formed.
The chart below shows how the current percentage of fee income 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 shown in the above graph, the Bitcoin miner’s income from the transaction fees has observed quite a large increase recently. These high fees have come as the total number of transactions on the network has reached a new all-time high.
The source of this sudden volume of transfers appears to be mainly due to the explosion in popularity of “Inscriptions”, BTC technology that is akin to Non-Fungible Tokens (NFTs) on other blockchains. Text-based inscriptions in particular 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’ earnings. From the chart, it is visible that there have been very few instances where the metric has seen peaks higher in magnitude.
To be precise, only 254 trading days in the entire history of the cryptocurrency (or 4.9% of the lifetime of the asset) have seen the miners collect a higher percentage of their revenue from the fees, which shows how rare this situation is. Certainly the miners would welcome this development induced by the inscriptions.
BTC price
At the time of writing, Bitcoin is trading around $29,000, down 1% in the last week.
Looks like the value of the asset has been moving sideways recently | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim at Unsplash.com, Charts from TradingView.com, Glassnode.com
