Bitcoin Miner Revenues Take a Nosedive as Transaction Fees Plummet Post-Halving Surge

After the recent Bitcoin halving, the revenue miners earn from transaction fees has dropped significantly. On the day of the halving, transaction fees represented 75% of total miner revenue, but this has since fallen to 35%. The surge in transaction fees on the halving day was partly driven by the launch of the Runes protocol, which allows for the issuance and transfer of tokens on the Bitcoin network.

Bitcoin Miner Revenues: Transaction Fees Plummet Post-Halving Surge

Amidst the momentous Bitcoin halving event that slashed block rewards by half, the portion of miner revenue derived from transaction fees has taken a significant downturn. According to a recent CryptoQuant report, transaction fees now account for a mere 35% of total miner income, a stark contrast to the 75% peak recorded on April 19, the day of the halving.

Transaction Fees Surge During Halving

The fourth Bitcoin halving, which occurred on April 18, 2022, halved miner block rewards to 3.125 bitcoins (BTC), resulting in a daily issuance decline from an average of 900 BTC to 450 BTC. On the halving day, daily miner revenue soared to an impressive $100 million, largely driven by a substantial surge in transaction fees. Daily fees on the Bitcoin network reached an unprecedented high of 1,258 BTC ($80 million), representing a remarkable 75% of total revenue for that day.

A key factor contributing to the elevated transaction fees was the Runes protocol, which ignited network activity upon its launch on the Bitcoin halving block. Runes enables the issuance and transfer of fungible tokens through the storage of data in OP RETURN codes. The utilization of these codes hit a record high of 512,000 on the halving day as users flocked to the Runes Protocol.

A Significant Fall in Fees

However, less than 24 hours after the halving, transaction fees reverted to lower levels and have remained there since. Fees currently constitute only 35% of total miner revenue, while the latter has stabilized around $50 million, a 35% decline from the pre-halving record-high levels of approximately $78 million.

Data from YCharts reveals that Bitcoin transaction fees have plummeted from $80 million on April 20 to a mere $6 million. Over the past week, they have averaged around $16 million, with the lowest figure observed on April 26.

Implications for Miners

The halving event, coupled with the subsequent decline in transaction fees, has placed increased pressure on Bitcoin miners. With block rewards halved, higher transaction fees and rising BTC prices were expected to sustain their profitability. However, with fees dwindling and BTC struggling to surpass $64,000, the viability of some mining operations is now in question.

Despite the challenges, CryptoQuant notes that it is premature to assess the long-term impact of the halving on the network hashrate. Miners appear to be continuing operations at the same rate as before the halving. The Bitcoin network hashrate stands at 617 EH/s, while its hashprice has reached $0.07 per TH/s, the lowest since October.

These developments highlight the evolving dynamics of the Bitcoin mining industry. While the halving event initially provided a boost to miner revenue, the subsequent decline in transaction fees has created new challenges. As Bitcoin continues to mature, the role of transaction fees in sustaining miner profitability will be closely watched by industry observers.