The data shows that bitcoin miners’ revenue from transaction fees has fallen by 90% as the BRC-20 token craze slows.
Bitcoin miners are now making just $1.7 million in transaction fees
Bitcoin miners earn revenue through two main sources: the block rewards they receive for solving blocks on the network and the transaction fees they earn for handling individual transfers.
In the past two years, the latter’s contribution to total revenue has been very small, which means that miners have had to survive on block rewards alone.
Recently, however, the transaction fee revenues for on-chain validators have been seeing sky-high values, thanks to the BRC-20 token craze that has taken over the market.
In general, transfer fees remain low when there is little traffic on the blockchain. This is because investors have little incentive to attach higher fees when there are few waiting times for their transactions to be processed.
However, in busy periods, the competition to get transfers becomes very high. Since miners only have limited capacity, they prioritize transactions with higher fees. Then, of course, senders incur higher transaction fees to compete with others in processing their transfers first.
BRC-20 tokens, fungible tokens created on the Bitcoin blockchain using the Ordinals protocol, have appeared on the network over the past few months. Before long, they gained huge popularity.
These tokens have led to a sharp rise in transactions on the network, meaning the chain has become congested, and fees have shown inflation in response. At the peak, the total amount miners were making from transfer fees reached historic levels.
However, according to data from the on-chain analytics company glassFees have dropped dramatically since then as BRC-20 tokens have lost ground. The chart below highlights the latest trend in Bitcoin transaction fees.
The value of the indicator seems to have gone down a lot in recent days | Source: Glassnode on Twitter
As the chart shows, bitcoin transaction fees reached $17.8 million at the height of the BRC-20 token’s popularity. This was an unusual value, as in only two days during the history of the cryptocurrency were higher values observed; Both happened during the 2018 peak.
After a massive slowdown in the BRC-20 token craze, miners are now making just $1.7 million in transaction fees. That’s only low relative to the brutal levels previously seen. However, when compared to what has generally been the norm, the current values are still quite high.
For reference, just 310 trading days in the lifetime of the blockchain (equivalent to just 6.7% of the lifetime of active trading) has seen Bitcoin miners earn larger amounts in fees.
BTC price
At the time of writing, Bitcoin is trading at around $27,900, up 2% in the past week.
Looks like the asset has noted some recovery | Source: BTCUSD on TradingView
Featured image by Dmitry Demidko on Unsplash.com, charts from TradingView.com, Glassnode.com