Key Points
- Bitcoin miners are feeling the effects of reduced transaction fees and increased competition.
- Despite a decrease in transaction fees, Bitcoin’s hash rate remains historically high.
Bitcoin miners are beginning to feel the effects of a changing market.
The hype around Runes, a new token standard, had previously pushed both the number and value of transactions on the Bitcoin network to record highs.
The Impact of Runes
However, this surge in activity could not be sustained indefinitely. While approximately half of Bitcoin transactions are still linked to Runes, the total number of transactions has significantly decreased.
The fees associated with the initial excitement around Runes appeared to reach unsustainable levels. The average transaction fee on the network spiked to $40, a cost many users found prohibitive.
Bitcoin Miners Struggling
The high fees were a boon for Bitcoin miners, who were facing a 50% reduction in the block subsidy following the halving.
The surge in fees coincided with the launch of Runes, helping to offset the impact of the reduced 3.125 BTC reward. Over $80 million was paid in transaction fees the day after the halving, bolstering miner revenue.
However, as fees have returned to normal levels, with total miner revenue from transaction costs falling below $5 million, miners are starting to feel the strain.
Despite the reduced revenue, Bitcoin’s hash rate remains high. The overall hash rate has been on an upward trend since Bitcoin’s inception, with only a minor dip during the China crackdown.
Unless miners begin to exit the market, it’s unlikely we’ll see the levels of miner revenue seen when there was less competition to mine the next Bitcoin block.