The Rise and Fall of Bitcoin Ordinals and Its Impact on BTC Miners and Transaction Fees
Bitcoin Ordinals, the new service on the Bitcoin network, has achieved a remarkable milestone in just over four months since its launch. The number of inscriptions has passed the 10 million mark, making it one of the fastest-growing developments on the network. However, the hype that surrounded it earlier this month has now subsided, and BTC miners are feeling the impact on transaction costs. This article examines the rise and fall of Bitcoin Ordinals and its effect on BTC miners and transaction fees.
BTC Miners came in big
At the beginning of March, the popularity of Bitcoin Ordinals gained momentum as the service made it possible to launch non-fungible tokens (NFTs) on the network. Since then, the creation and trading of BRC-20 tokens has also been possible, leading to a massive influx of new tokens on the network. As a result, the network was extremely busy, and the competition for a spot in a transaction block became quite fierce.
Impact on Transaction Costs
During periods of congestion, users of the network have to pay higher transaction costs to get their transactions confirmed quickly. The transaction fees are paid to the miners in addition to their block reward, and at the peak of the BRC-20 frenzy, the total amount miners earned from transaction fees reached a historic level of $17.8 million. This was at a time when the BTC price was at its peak in 2018, and miners were able to earn more from transaction fees than they did in two trading days.
Bitcoin Ordinals Hype Abated: Miner Income Decline
As the hype surrounding Bitcoin Ordinals subsided, miners are now earning ‘only’ $1.7 million from transaction fees paid. This represents a significant drop of no less than 90 percent compared to the earlier peak. However, the values are still quite high compared to the average of the past few months. For reference, only 310 trading days into the blockchain’s total lifetime did the miners manage to earn more from the fees on the network.
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Impact on BTC Miners
BTC miners, who rely on transaction fees as additional income on top of their block reward, are feeling the impact of the decline in transaction fees. The drop in income means that miners have to work harder to earn the same amount of revenue. This could lead to a decline in interest in mining, which could impact the security and stability of the network.
In just over four months, Bitcoin Ordinals has achieved a remarkable feat on the Bitcoin network. However, the hype surrounding it has subsided, and BTC miners are feeling the impact of the decline in transaction fees. While the values are still high compared to the average of the past few months, the decline in income could lead to a decline in interest in mining, which could impact the security and stability of the network in the long term.