Bitcoin transaction fees make miners rich?!

If you know Bitcoin at all, you know that the block reward for miners halves every four years. We also call that event “the halving” and we have just completed it. Due to these four-yearly halvings, the “subsidy” that miners receive for a block ultimately drops towards 0 Bitcoin.

This means that they have to generate an increasing part of their turnover from transaction costs and that seems to be working.

Fear of the end of Bitcoin

For years, people worried about the future of Bitcoin if the block reward for miners dropped to 0 BTC. After all, who would want/be able to secure the network at that moment?

Some people think (and that is still an option) that big investors in Bitcoin will take on some of the security in the future. After all, they benefit from the network being sufficiently resilient to attacks.

Others believe that transaction costs will eventually increase on Bitcoin as adoption of the digital currency also increases. Things like the Spot Bitcoin ETFs don’t help with that.

In that respect, it remains to be seen whether the transaction costs will ever be sufficient for the miners to live on. However, if the trend of the past two years continues, things should turn out fine.

Miners earn greedily from transaction costs

Ki Young Ju from CryptoQuant reports that transaction costs now account for 7 percent of the total turnover of Bitcoin miners. That was 1 percent two years ago. In that regard, there is a special trend going on on the Bitcoin network.

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

Projects such as Runes and Ordinals are of course largely responsible for the increase in transaction costs, but the adoption of Bitcoin in general also helps.

Runes and Ordinals are protocols that make it possible to launch tokens on the Bitcoin blockchain. Consider, for example, memecoins or of course non-fungible tokens (NFTs).

Memecoins are particularly popular at the moment, because they have achieved considerable profits in recent months.

Trade €10,000 for free and get a 10 euro bonus

Do you want to enter the crypto world and perhaps buy Bitcoin or another crypto? Then grab your chance now with this exclusive offer! Thanks to a special deal between Newsbit and Bitvavo, one of the most accessible and user-friendly crypto exchanges in Europe, our readers receive an exclusive offer.

Create an account with Bitvavo via the button below and receive a welcome gift of 10 euros completely free. And that’s not all – you also don’t pay trading fees on your first 10,000 euros in transactions. Register now!