Deciphering the link between Bitcoins [BTC] block sizes and miner fees

• Block size growth driven by Ordinals inscriptions and BRC-20 is impacting the Bitcoin network.
• Bitcoin mining fees witnessed a historic increase as the difficulty of mining increased.

In recent days, the increase of Ordinals inscriptions and BRC-20 have shown a significant impact on Bitcoins [BTC] network, even down to the block size. The latest data showed that the block size has increased and may grow further. This begs the question: what implications does this have for the network’s miners?

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Bitcoin block size projections

Glass nodes data indicated a noticeable increase in the size of the Bitcoin blockchain, growth of approximately 24 GB. This expansion can be attributed to the growing popularity of Ordinals inscriptions, which require more block space on the network.

At the time of writing, the blockchain size stood at 479.9 GB. However, the duration of this inscription trend remains uncertain, although there are estimates of the potential future size of the blockchain.

Source: Glassnode

These estimates depend on whether the full 4MB, 2.5MB, or 1.35MB will be consistently added to the blockchain. Regardless of the specific projection, a larger block size raises concerns for the miners operating in the network.

Some effects of increased block size on Bitcoin mining

Miners play a crucial role in the Bitcoin network, but the growing size of the blockchain presents more challenges for them.

First, miners must store a complete copy of the blockchain on their computers. As the blockchain expands, it requires more storage space, which can pose difficulties for miners with limited capacity or running on devices with limited resources.

Also, miners rely on sending and receiving blocks and transactions over the network. With a larger blockchain, the volume of data that needs to be transferred increases.

Miners operating with slower internet connections or limited bandwidth may experience delays in downloading and propagating blocks, potentially affecting their participation efficiency.

Additionally, when a miner receives a new block, they must validate the transactions and ensure their accuracy before adding it to their local copy of the blockchain.

ONEIf the blockchain grows in size, the validation process naturally takes longer due to the increased volume of data to be verified.

This extended validation period can affect the speed at which miners confirm transactions and add new blocks to the blockchain, potentially affecting overall network efficiency.

Current state of miners’ fees and difficulties

Recently, the Bitcoin network experienced significant growth, leading to a notable increase in mining fees for network participants.

The value of mining fees reached historic levels, representing a remarkable milestone. According to data provided by Glassnode, mining revenues increased to approximately 25.59%.

The current level marked the third highest mining fee since the inception of Bitcoin. The two previous instances where the mining fee reached higher levels were observed in 2017, peaking at 35.07% and 25.8% respectively.

Source: Glassnode

Furthermore, Bitcoin’s mining difficulty had a noticeable upward trend. Especially since the beginning of this year, the mining difficulty has consistently reached new all-time highs.

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Several techniques and optimizations have been proposed and implemented in the Bitcoin network to meet the growing blockchain size.

A notable development is the Lightning Network, which strives to alleviate the transaction load on the main blockchain. Also, considering the current state of the Bitcoin network, there is a potential for the emergence of other L2 solutions.