Journalist
Posted:
- Bitcoin network fees have increased significantly since the launch of Inscriptions and Ordinals in February.
- However, the miners’ income has fallen.
Bitcoin income [BTC] miners have remained relatively low despite the spike in total network fees and the share of miner revenues from these fees in recent months. Glass junction found in a new report.
According to the on-chain data provider, Inscriptions and Ordinals’ activity on the Bitcoin network resulted in an increase in demand for blockspace. Since its launch in February, “this increased demand has been sustained,” Glassnode notes.
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As users explored the newly discovered rise of non-fungible tokens (NFTs) in the form of on-chain texts and images, user activity on the Bitcoin network surged, causing demand for blockspace to grow rapidly. As transactions filled the Bitcoin mempool, network fees increased.
Source: Glassnode
According to Glassnode, “Total fees increased by 216% from ~12 BTC/day to 38 BTC/day, and the share of miner revenue from fees increased from 1% to 4%.”
However, while these increases were significant, the data provider noted that they remained small “in an absolute and historical context.”
Too many miners, not enough compensation
Following the launch of Inscriptions and Ordinals in February and the resulting growth in demand for blockspace on the Bitcoin network, the market saw a renewed interest in mining activities on the network. The launch of newer ASIC platforms also contributed to an increase in new demand for mining on the network
Moreso at the time, the price of BTC started an upward trajectory, and the price had risen by more than 40% since January 1, prompting many more people to join the mining community on the chain.
As a result, the amount of hashrate competing for mining rewards increased. According to Glassnode, this has increased by 50% since February.
Source: Glassnode
While network fees and miners’ share of them have seen a corresponding increase since February, the reward earned per Exahash has been driven to a new low due to the surge in the number of miners all competing for the same rewards.
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According to Glassnode, “Miners will now only earn 2.26 BTC (~$60,000) per Exahash active on the network.”
Source: Glassnode
The report further found that miners on the Bitcoin network are “on the verge of becoming unprofitable.” This is because the average purchase cost of miners was a 10% drop in premium from the current spot price.