On-chain data shows that Bitcoin miners are making 12.4% of their revenue from fees after the number of transactions reached an all-time high.
Bitcoin Miner’s share of transaction fee revenue has skyrocketed recently
According to data from the on-chain analytics company glassOnly 254 trading days in the entire history of the cryptocurrency have seen transaction fees contribute a larger share of the total revenue of on-chain validators.
There are two main components to the revenue that miners generate: block rewards and transaction fees. Block rewards are what this group gets as compensation for mining blocks on the Bitcoin network. These bonuses always have a fixed value, except for halving events, which are then permanently cut in half.
On the other hand, transaction fees can be highly variable, as blockchain users have to attach the amount they see fit. In general, in periods of relatively little traffic on the network, fees remain low. This is because there is enough capacity in the chain that they should be moved relatively quickly even with low charges.
However, things are different when the network becomes active. Miners can only handle a limited amount of transactions at a time, so they start prioritizing transfers with a larger amount of fees. In order to compete with other users in getting their transactions done faster, senders start charging high fees.
At times like these, the average fee can naturally go up, and thus, the percentage of miner revenue they make up for increases. Recently, these market conditions have formed again.
The chart below shows how the current percentage of revenue from miners’ fees 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 chart above, the bitcoin miner’s revenue from transaction fees has been skyrocketing recently. These higher 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 appears to be mainly due to the surge in popularity of “patches,” which are BTC technology that are similar to non-fungible tokens (NFTs) in other blockchains. In particular, text inscriptions have been very popular lately.
As a result of this high activity on the network, fees now make up 12.4% of miners’ revenue. From the chart, it’s clear that there have been very few instances where the scale has seen higher volume spikes.
To be precise, only 254 days in the entire cryptocurrency’s history (or 4.9% of the asset’s trading life) have miners observed a higher percentage of revenue than fees, which shows how rare this situation is. Certainly, miners will welcome this development caused by cryptocurrency.
BTC price
At the time of writing, Bitcoin was trading at around $29,000, down 1% in the past week.
Looks like the value of the asset has been moving sideways recently | Source: BTCUSD on TradingView
Featured image by Brian Wangenheim on Unsplash.com, charts from TradingView.com, Glassnode.com
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