Bitcoin [BTC]: Silver lining for miners as fees exceed 2021 levels, more inside
- The divergence between daily miner revenue and 365-day SMA has broadened since the start of 2023.
- There were instances of transaction fees exceeding the block rewards given to miners.
While the growing congestion on the Bitcoin [BTC] network may have spooked purists and affected users who now have to wait for extended periods of time to get their transactions validated, BTC miners have been laughing all the way to the bank.
Read Bitcoin’s [BTC] Price Prediction 2023-24
According to a data scientist from analytics firm Glassnode, miners earned about $17.7 million through transaction fees on 8 May. This was higher than what they were at the peak of the 2021 bull market. Though the fees fell on 9 May to $12.15 million owing to steps taken to mitigate congestion, the overall impact on miner’s revenue was huge.
Happy #bitcoin miners.
$17.7 million USD earned through transactions fees – in a single day.
— Rafael Schultze-Kraft (@n3ocortex) May 9, 2023
Miners strike gold
A better way to look at BTC miners’ growing profitability was by comparing the total daily revenue earned by miners to the 365-day simple moving average. The chart below suggests that the divergence between the two has broadened since the start of 2023, with the differential reaching $17.15 million on 9 May.
Within the past 24 hours, miner revenue exceeded 31%. On 8 May, the share had shot up to 42%. This indicated a positive shift that contrasted sharply with the battering that miners endured during the 2022 bear market’s lows.
Miners need to be incentivized to participate in validating transactions and securing the Bitcoin network. The incentives come in the form of two methods: block rewards and transaction fees. While the first is getting less lucrative as the rewards progressively reduce every four years, more miners are relishing the idea of increased transaction fees.
In fact, for the first time since 2017, a single block’s transaction fees exceeded the block rewards given to miners according to a tweet by an analyst.
BREAKING: #Bitcoin block 788695 contained transaction fees greater than the block subsidy.
6.7 BTC transaction fees + 6.25 BTC subsidy
This is a the first time in history this has ever occurred due to competitively high block space demand. pic.twitter.com/J7IcwzIVKE
— Joe Burnett (?)³ (@IIICapital) May 7, 2023
Steps to combat congestion
Meanwhile, faced with a growing transaction jam, core developer Ali Sherief proposed adding a runtime option that will instantly eliminate all unusual Taproot transactions, according to a tweet by popular journalist Colin Wu. However, popular consensus couldn’t be built on the same.
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Network traffic increased mostly due to transactions using Taproot addresses. On 9 May, 66% of all transactions on Bitcoin used Taproot.
Owing to the concerns around congestion, BTC failed to break through the $28k level, trading at $27,639.89 as of this writing, data from CoinMarketCap showed. As per Santiment, BTC’s funding rate flipped to negative on crypto exchange BitMEX, indicating that more investors were positioned for price losses.