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Cryptocurrency News Articles
Bitcoin Transaction Fees Surpass Ethereum Amidst Halving and Ordinal Innovations
Apr 19, 2024 at 09:00 am
Bitcoin transaction fees have exceeded Ethereum's for three consecutive days as miners and traders anticipate the upcoming Bitcoin halving event and the introduction of Runes, a new Bitcoin token standard. This surge in fees coincides with a decline in BRC-20 token prices, indicating a potential shift in trader focus towards Runes. Miners are relying on higher fees and a sustained increase in Bitcoin's price to offset the revenue reduction resulting from the halving.
Bitcoin Transaction Fees Eclipse Ethereum Amid Halving and Ordinal Innovations
As the highly anticipated Bitcoin halving event draws near, transaction fees on the Bitcoin blockchain have outpaced those on Ethereum for an unprecedented three consecutive days. This surge in fees underscores the crucial role that fees will play for Bitcoin miners following the reduction in block rewards.
Fees Reach New Heights
On April 17, Bitcoin miners garnered $7.47 million in fees, surpassing the $7.31 million earned by Ethereum stakers by approximately $160,000. This trend continued on April 15 and 16, with Bitcoin miners collecting $9.98 million and $5.91 million, surpassing Ethereum stakers by $3.5 million and 1.1 million, respectively.
However, Ethereum still maintains a slim lead on a 7-day average fee basis, with an average of $8.55 million compared to Bitcoin's $7.57 million.
Impact of Bitcoin Halving
The surge in Bitcoin transaction fees coincides with the upcoming Bitcoin halving event on April 20. This event will reduce the block reward from 6.25 BTC ($398,000) to 3.125 BTC ($199,000), potentially leading to a significant decrease in miners' revenue.
Currently, approximately 900 Bitcoin are mined each day, generating around $57.2 million in revenue. With the halving, this revenue is expected to decrease, leading to an increased reliance on transaction fees. Based on April 17's fee revenue, fees currently account for approximately 11.5% of miners' total block rewards.
Runes and Ordinals
The introduction of non-fungible token (NFT)-like Ordinals inscriptions in January 2023 has also contributed to the rise in Bitcoin transaction fees. Ordinals enables the creation of inscriptions on the Bitcoin blockchain, resembling NFTs on other platforms.
Furthermore, the upcoming release of Runes, a new Bitcoin token standard, at block 840,000 (coinciding with the halving event), is expected to generate an additional revenue stream for miners. Runes aim to facilitate the creation of fungible tokens on Bitcoin, targeting memecoin enthusiasts and community-driven audiences.
Market Shifts
The recent increase in Bitcoin fees may also be partially attributed to the recent decline in BRC-20 token prices, such as Ordinals (ORDI) and Sats (SATS), which have experienced significant drops in value over the past week. This shift in investor focus may have redirected attention to Runes, further contributing to the surge in Bitcoin transaction fees.
Conclusion
The ongoing surge in Bitcoin transaction fees is a multifaceted phenomenon driven by the upcoming halving event, the introduction of Ordinals and Runes, and market shifts. As the halving approaches, miners will increasingly rely on transaction fees to mitigate the reduction in block rewards. The development of new functionalities on the Bitcoin blockchain, such as Ordinals and Runes, further enhances the revenue opportunities for miners, shaping the future of the Bitcoin network.
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