- Bitcoin Ordinals NFTs dominated at the time of writing and accounted for most of the transaction activity on the Bitcoin network.
- Declining miner income and increased miner difficulty posed challenges and may affect the price of BTC.
Since the introduction of Bitcoin [BTC] Inscriptions and Subsequent Ordinals NFTs, the sector has seen a lot of growth. Bitcoin Ordinals have moved up to second place, surpassing most competitors in terms of NFT volume. This increase in dominance raised questions about its impact on the wider Bitcoin sector.
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Source: Stocktwits NFT
Bitcoin Ordinals dominate
According to Dune Analytics, there were 10 million brc-20 inscriptions at the time of writing more than 1% of all Bitcoin transactions. The rising popularity of these NFTs shows the growing interest in digital collectibles and unique blockchain-based assets.
Source: Dune analysis
Despite the dominance of Ordinal transactions on Bitcoin, the volume of Ordinal transactions on marketplaces had declined significantly.
This decline may indicate a shift in user behavior, with NFT trading activity shifting to other platforms or projects outside of traditional marketplaces. It heightened the need to explore the reasons behind this shift and analyze the evolving dynamics of the NFT market.
Source: Dune analysis
In addition, miner earnings fell significantly, according to Glassnode data. Notably, total daily production costs reached $18.3 million, while miner revenue reached $24.9 million. This produced an estimated net profit of $6.6 million.
Falling mining revenues suggested that miners needed to adapt to changing market conditions and optimize their mining strategies.
Source: Dune analysis
When do miners see green?
Moreover, the difficulty of the miner has also increased. The increasing difficulty of miners negatively impacts miners by making mining more challenging and labor intensive.
As miner difficulty increases, miners must invest in more powerful and efficient mining hardware to compete effectively. This results in increased operational costs for miners as they have to upgrade their equipment and invest more in electricity consumption.
The high difficulty also reduces the chance of miners successfully mining new blocks, leading to a decrease in the frequency of block rewards they receive.
If miners’ earnings continue to fall, miners would be forced to sell their holdings. This will negatively affect the price of BTC in the long run. Selling pressure from miners could lead to a downward price movement, which could affect market sentiment and potentially lead to further selling by other market participants.
Source: Blockchain.com
Read Bitcoin [BTC] Price forecast 2023-2024
At the time of writing, BTC was trading at USD 30,082. The price had risen over the past week, which can be attributed to interest from funds such as BlackRock.
However, with the price increase, Bitcoin’s MVVR ratio also increased. This suggested that most Bitcoin-enabled addresses were profitable. The profitability of Bitcoin holdings may have a major impact on holders’ decision-making in the future.
Source: Sentiment
