Bitcoin
Rising Bitcoin Fees After Halving Highlights New Revenue Dynamics for Miners
Highlights in the chain
DEFINITION: Total transaction fees are the total amount of fees paid to miners. Coins issued (minted) are not included.
Total Bitcoin Transaction Fees emerged namely at the beginning of 2024. After the halving in April, rates registered a sharp increase, momentarily reaching record highs. This increase is largely attributed to the introduction of Runes, a new protocol, which significantly increased network activity and congestion, resulting in a substantial increase in transaction fees. On April 20, transaction fees peaked at 1,257.71 BTC, representing more than 75% of the mining company’s revenue for the day.
Since then, rates have declined as ordinals and runes have lost popularity.
Total transaction fees: (Source: Glassnode)
High fees have had several impacts on the Bitcoin ecosystem. For example, the increase in fees has made Bitcoin transactions more expensive, which in turn has led to a decrease in active addresses on the network, reaching the minimum of three years. Despite this, the increase in transaction fees shows the feasibility of a change in the composition of miner revenues as a future dependence on fees for Bitcoin’s sustainability, which will inevitably be necessary once all Bitcoin has been mined.
While rates have recently fallen to levels similar to mid-2023, a recent increase has been observed, and any resurgence in enrollment popularity could see rates return to elevated levels.
As the year progresses, it will be crucial to observe how these rate conditions influence Bitcoin usability and mining profitability. The long-term effects of these changes will likely play a significant role in shaping the future of Bitcoin transactions and participation in the network.