- The share of block rewards from transaction fees increased to 21% on November 16th.
- In a post-halving scenario, similar events would result in a higher share of fee revenue.
Bitcoins [BTC] The uptrend has resulted in rampant buying and selling of the asset, resulting in a significant increase in network transactions.
The higher the transactions, the more fees Bitcoin miners earn from validation. This was exactly the case, as shown by AMBCrypto’s analysis of hashrate index data.
Fees make up a higher proportion of rewards
The share of block rewards from transaction fees increased to 21% on November 16th. In fact, the share has been consistently above 10% over the last week.
Source: Hashrate Index
In 2o23, this was the second multi-week period in which average fees accounted for more than 10% of mining rewards. Such spikes were last seen during the Ordinal frenzy in early May.
Why miners should celebrate these events
Popular X user and Bitcoin enthusiast Charlie Spears described the above developments as “huge.” He essentially extrapolated the ongoing fee spikes to a post-halving scenario and came to some interesting insights.
Bitcoin’s block rewards should be reduced from the current 6.25 BTC to 3,125 BTC after the halving, expected in April 2024.
Spears said that the share of transaction fees would increase to 20-30% on average after the halving as the share of block subsidies would decrease.
Bitcoin’s fee revenue model has been heavily debated over the years. Bitcoin is a deflationary asset and once the 21 million mark is reached, miners will rely entirely on transaction fees to cover their expenses.
High transaction fees could therefore help ensure the long-term sustainability of the network.
Enlargement of the block space
Charlie Spears emphasized the importance of ordinal-like events in expanding the use case of the Bitcoin blockchain.
Read BTC price prediction 2023-24
AMBCrypto observed a significant increase in the average block quantity limit since the launch of Ordinals. From a range of 1-1.14 MB, the block size increased to an average of 1.6 MB over the last eight months. At its peak in February, the size reached 2.5 MB.
Increasing block space meant that miners could add more transactions in a single block, helping them recoup losses in the post-halving period.
Source: Hashrate Index
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