On-chain data shows that the bitcoin signup craze is dying as miners' revenue from transaction fees has plummeted.
bitcoin Miner's revenue from fees has fallen to just 6% now
At the end of 2022, a new application of the bitcoin blockchain emerged: “Registrations”. In simple terms, an inscription is metadata “inscribed” in the smallest unit of bitcoin, the satoshis (sats).
This way any type of data can be attached to btc transactions, as long as it respects the 4 MB block size limit. Throughout 2023, applications of the technology, such as non-fungible tokens (NFTs) and BRC-20 tokens, came to life on the network.
Since Inscriptions appeared on the scene, the popularity of these transactions was especially high during two periods in particular. They drastically affected the blockchain mining economy, at least for a brief time.
Since Enrollments are like any other transaction on the network, they affect the metrics related to them. Transfer fee is a metric that Enrollments had a significant impact on.
The fee in question is, naturally, the one that any sender on the network must attach to their transactions as a reward for the miner, who would add it to the next block.
The rate that a user would be willing to charge with their transfers depends on traffic conditions. During periods of congestion, transfers may end up waiting a while in the mempool, so those who don't want to risk waiting can opt for an above-average rate.
At times of especially high traffic, the average rate can skyrocket as users compete with each other in this way to avoid rushing. On the other hand, slow periods often see low network fees as users have little incentive to opt for high amounts.
The periods of sign-up madness mentioned above naturally caused fees to skyrocket, as this type of transaction flooded the network, forcing users to pay higher amounts.
The last of these periods occurred in recent months, but as analyst James Van Straten explained in a mail At X, this recent enrollment boom appears to be over for the cryptocurrency, at least for now.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/Bitcoin-sign-up-craze-fades-as-miner-fees-plummet.jpeg" alt="bitcoin Miner Income from Fees” width=”1800″ height=”1013″/>
The value of the metric seems to have plunged down recently | Source: @jvs_btc on X
The graph shows that the contribution of the transaction fee to the revenue of miners (who have block rewards as their other component) skyrocketed to extremely high levels during the recent and previous enrollment booms.
These latter periods were maintained for a significant period of time. Still, the popularity of Signups has now declined as fees only contribute to 6% of miners' total revenue.
However, something to keep in mind is that while this amount is low, fees have historically contributed even less to miners' income. For perspective, the current value is more than double what it was before this latest enrollment boom.
btc Price
At the time of writing, bitcoin is trading at around $42,100, up 6% from last week.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/dbvumlsK/" alt="bitcoin price chart” width=”1534″ height=”864″/>
Looks like the price of the asset has seen some pullback over the past day | Source: BTCUSD on TradingView
Featured image by Brian Wangenheim on Unsplash.com, TradingView.com charts, Glassnode.com