Journalist
Posted:
- The portion of block rewards coming from transaction fees increased to 21% on November 16.
- In a post-halving scenario, similar events would result in a larger share of fee income.
Bitcoins [BTC] A bullish jump has resulted in rampant buying and selling of assets, causing a significant spike in network transactions.
The higher the transactions, the more fees Bitcoin miners earn by validating them. This was exactly the case, according to AMBCrypto’s analysis of the Hashrate Index data.
Costs make up a larger portion of the rewards
The portion of block rewards coming from transaction fees increased to 21% on November 16. In fact, the stock has been consistently higher than 10% over the past week.
Source: Hashrate index
In 2023, this was the second multi-week period in which average fees exceeded 10% of mining revenues. Such spikes were last seen during the Ordinals’ rampage in early May.
Why miners should celebrate these events
Popular X user and Bitcoin enthusiast Charlie Spears called the above developments “major”. He basically applied the ongoing spike events to a post-halving scenario and came up with some intriguing findings.
Bitcoin’s block rewards would be reduced from the current 6.25 BTC to 3.125 after the halving, tentatively scheduled for April 2024.
Spears said that as the share of block subsidies would decline, the share of transaction fees would increase to 20% to 30% on average after the halving.
Bitcoin’s fee revenue model has been hotly debated over the years. Bitcoin is a deflationary asset, and once the 21 million limit is reached, miners will be completely dependent on transaction fees to cover their expenses.
High transaction costs can therefore help ensure the long-term sustainability of the network.
Increasing the block space
Charlie Spears highlighted the importance of Ordinals-like events in expanding the use case of the Bitcoin blockchain.
Read BTC’s price prediction 2023-24
AMBCrypto noted a significant increase in the average block amount limit since the introduction of Ordinals. From a range of 1 to 1.14 MB, the block size has increased to an average of 1.6 MB over the past eight months. At its peak in February it reached 2.5 MB.
The increase in block space allowed miners to add more transactions in a single block, helping them offset losses in a post-halving period.
Source: Hashrate index