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The new BRC-20 token standard has driven Bitcoin (BTC) transaction fees through the roof – and the network’s miners are reaping every satoshi as added profit.
Data from the HashRate Index shows that the world’s largest Bitcoin mining pools have earned roughly one-third of their profits from transaction fees alone within the past three days.
BRC-20: A New Source Of Miner Revenue
Foundry USA – the largest mining pool boasting 26% of market share – has an average of 3.23 BTC per block in transaction fees over the relevant period. Meanwhile, Antpool – its largest rival based in Beijing, China – has averaged 3.26 BTC per block in fees.
For context, that’s more than a 50% bonus for both pools, which already receive 6.25 BTC as a baseline subsidy attached to each block. Until this year, the subsidy counted for the vast majority of miner revenue, and was their main incentive to expend energy securing the network.
But with the takeoff of Ordinals earlier this year, Bitcoin users themselves are bidding high for miners to let them make use of the network’s scarce block space. Not only can they use it for standard BTC transfers, but also to mint permanent NFTs and deploy alternative tokens and meme coins.
On-chain analysis that inscriptions have generated between 20% and 40% of recent network fees. That includes a combination of large, weighty NFT-based inscriptions, and a sea of tiny, text-based BRC-20 token transfers.
With the average Bitcoin block netting upwards of 9 BTC ($374,000), miners may be better protected from the upcoming Bitcoin halving. Expected for April, the halving will Bitcoin’s block subsidy from 6.25 BTC to 3.125 BTC – an event analysts claim “washes out high-cost inefficient miners.”
According to cryptofees.info, Bitcoin has averaged higher daily fees than Ethereum over the past seven days at $13.9 million per day.
Unmanageable Fees
Starting in early December, Bitcoin transaction costs reached a new all-time high of 350 satoshis per vByte (sat/vB). As of Monday, data from mempool.space shows that costs have cooled to 127 sat/vB, or roughly $7.00 per transaction. Last week, that cost ran as high as $30 per transaction.
That’s not good for average users – especially those who have multiple small Bitcoin transactions sitting within a single wallet. To move those coins, users must pay a fee on each of those separate transfers – called UTXOs – which can erase their holdings depending on how dispersed they are.
Bitcoiners both for and against Ordinals are seeking solutions to the problem, from blocking inscriptions where possible to onboarding users to cheaper layer 2 scaling solutions.
Throughout the month, Blockstream CEO Adam Back has cited a revival in transaction volume on Bitcoin’s Liquid network – a once barren sidechain built for fast, cheap, and private BTC payments.
