Bitcoin-Based Apps Drive Miners’ Income

The increase in transaction fee revenue for Bitcoin miners can be attributed to new token protocols such as Ordinals and Runes.

The fourth Bitcoin halving event has resulted in a 50% reduction in miners’ earnings. 

However, the increase in decentralized application (dApp) activity on the Bitcoin blockchain has sufficiently alleviated the financial burden on miners. 

Bitcoin Miners Gain Revenue

The CEO of CryptoQuant, Ki Young Ju, emphasized a substantial transformation in the revenue sources for miners due to the emergence of applications on the Bitcoin network. 

Ju reports that transaction fees have increased significantly from 1% of miners’ total revenue two years ago to over 7% at present. 

It is expected that this pattern, which has endured for the last four weeks, will strengthen the foundational aspects of the network in the future. 

Building apps on #Bitcoin has significantly changed miners' income streams.

Transaction fees now account for over 7% of their total revenue, up from 1% two years ago.

This trend has persisted for the last four weeks and could potentially strengthen the network's fundamentals. pic.twitter.com/YVbdmLXB5c

— Ki Young Ju (@ki_young_ju) May 7, 2024

The increasing transaction fee revenue can be attributed to innovative token protocols such as Ordinals and Runes, which have enhanced Bitcoin’s utility. 

As a result of these developments enabling the generation of fungible and non-fungible tokens on the network, the volume of transactions has increased. 

Fixed block subsidies and user-paid transaction fees comprise Bitcoin Miner’s revenue. 

Constraints on block rewards result from programmable halving events. 

However, with the increasing proportion of transaction fees to revenue, they can offset the declining profit margins caused by each halving. 

BTC Miners Feel The Heat

Transaction fees of over $80 million bolstered miner revenue the day after the halving. 

The average transaction fee on the Bitcoin network increased to $40 during the height of runes activity, but it has since declined to less than $10 as network activity has returned to normal. 

However, as transaction costs have returned to their customary levels, the aggregate miner revenue has dropped below $5 million, exerting strain on the miners. 

At $0.048 (an all-time low), the seven-day moving average of Bitcoin miner revenue per terahashes per second (TH/s) has dropped precipitously. 

On the other hand, Bitcoin mining companies continue to rejoice on Wall Street. 

The stock of Bitcoin mining companies has experienced a recent upswing in tandem with the current recovery on Wall Street. 

Conversely, prominent Bitcoin mining entities such as Marathon Digital have been implementing significant modifications to increase mining activity and increase their market share.