Bitcoin miners made a significant $184 million from transaction fees in the second quarter, surpassing their earnings for the entire year of 2022. This surge in earnings was fueled by the rise in Bitcoin’s price and the increasing popularity of BRC-20 tokens.
The $184 million revenue represents a substantial 270% increase from the first quarter of 2023 and marks the first time since Q2 2021 that transaction fees exceeded $100 million in a single quarter, as reported by Coin Metrics on July 5.
Transaction fees are received by Bitcoin miners when a new block is validated, with the amount varying based on data volume and user demand for block space.
Coin Metrics attributed the increase in fees to Bitcoin’s price surge boosting revenues and the introduction of BRC-20, a new token standard on Bitcoin that allows for the creation and transfer of fungible tokens using ordinal inscriptions on the network.
“The token standard opens up new use cases for Bitcoin’s core transaction types and accelerates efforts to scale Bitcoin with the Lightning Network.”
Despite the substantial fee earnings, transaction fees accounted for only 7.7% of the total $2.4 billion earned by miners in the quarter. The majority of earnings came from Bitcoin block rewards, with miners currently receiving 6.25 BTC for each block solved, a figure set to halve to 3.125 BTC in the next halving cycle expected in May.
Additionally, Bitcoin miners had other positive developments in the second quarter, such as the Biden Administration’s proposed Digital Asset Mining Energy (DAME) tax being blocked and favorable macroeconomic conditions leading to lower electricity prices for U.S.-based miners.
In this special edition of State of the Network, we take a data-driven look at the most important events that impacted the digital assets industry in Q2 2023.
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— CoinMetrics.io (@coinmetrics) July 5, 2023
With Bitcoin’s hashrate reaching new all-time highs, competition in the mining fee market is intensifying due to the increased efficiency of the network with the adoption of advanced ASICs like the S19 XP.
Image Source: Tarasenko Andrey / Shutterstock
