- The difference between miners’ daily earnings and 365 days of SMA has widened since the start of 2023.
- There were instances of transaction fees being higher than the block rewards given to miners.
While the growing congestion on the Bitcoin [BTC] network may have spooked purists and affected users who now have to wait for extended periods of time to have their transactions validated, BTC miners have been smiling all the way to the bank.
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Miners earned about $17.7 million in transaction fees on May 8, according to a data scientist from analytics firm Glassnode. This was higher than what they were at the peak of the 2021 bull market. While fees fell to $12.15 million on May 9 due to congestion abatement measures, the overall impact on miner earnings was huge.
Cheerful #bitcoin miners.
$17.7 million USD earned through transaction fees – in one day.
📊https://t.co/HWoFWtrdkz pic.twitter.com/6Wc4PzDwx7
— Rafael Schultze-Kraft (@n3ocortex) May 9, 2023
Miners strike gold
A better way to look at the growing profitability of BTC miners was to compare miners’ total daily earnings to the 365-day simple moving average. The chart below suggests that the difference between the two has widened since the start of 2023, with the difference reaching $17.15 million on May 9.
Source: Glassnode
In the past 24 hours, miner turnover was up more than 31%. By May 8, the stock had skyrocketed to 42%. This signaled a positive shift that stood in stark contrast to the mistreatment miners endured during the 2022 bear market lows.
Source: Glassnode
Miners should be incentivized to participate in validating transactions and securing the Bitcoin network. The incentives come in the form of two methods: block rewards and transaction fees. While the former becomes less lucrative as the rewards gradually decrease every four yearsmore miners enjoy the idea of higher transaction fees.
For the first time since 2017, single block transaction fees actually exceeded block rewards given to miners, according to an analyst tweet.
BREAK: #Bitcoin block 788695 contained transaction fees in excess of the block grant.
6.7 BTC transaction fee + 6.25 BTC grant
This is the first time in history that this has ever happened due to competitively high demand for block space. pic.twitter.com/J7IcwzIVKE
— Joe Burnett (🔑)³ (@IIICapital) May 7, 2023
Steps to combat congestion
Meanwhile, facing a growing transaction outage, core developer Ali Sherief suggested adding a runtime option that immediately eliminates all unusual Taproot transactions, according to a tweet from a popular journalist Colin Wu. However, no popular consensus could be built on that.
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Network traffic increased mainly due to transactions with Taproot addresses. As of May 9, 66% of all transactions on Bitcoin used Taproot.
Source: Glassnode
Due to congestion concerns, BTC failed to break through the USD 28,000 level and is currently trading at USD 27,639.89, data from CoinMarketCap showed. According to Santiment, BTC’s funding rate flipped negative on crypto exchange BitMEX, indicating that more investors were positioned for price losses.
