- Bitcoin’s block interval significantly dipped as the hash rate soared.
- The number of unconfirmed transactions in the Mempool queue was low.
Transaction fees on the Bitcoin [BTC] network have dropped to their lowest levels since March, potentially causing more hardship for miners. According to a tweet by on-chain analytics firm IntoTheBlock, the total fees collected on 14 July stood at $3.6 million, marking a 37.7% increase from the previous day.
#Bitcoin fees dropped to their lowest since March, despite transaction activity rebounding pic.twitter.com/xT9VMYoXOP
— IntoTheBlock (@intotheblock) July 14, 2023
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Interestingly, the decline in fees came despite a sharp rebound in on-chain trading activity. As per the Glassnode chart below, transaction numbers witnessed a robust recovery in July after weeks of downtrend.
Source: Glassnode
In fact, the transaction count last weekend reached its highest level since the BRC-20 euphoria of May. What could then possibly explain the dip in fees?
Block intervals dip
The period witnessing the surge in transaction count also saw a sharp uptick in the network hash rate. A growing hash rate is a positive development in the sense that it makes the network more decentralized and secured.
However, a growing hash rate also reduces the rate at which new blocks are mined and added to the chain. As depicted below, the block interval significantly dipped as the hash rate soared. This meant that transactions could be processed quickly without people needing to bid up their fees to jump the line.
Source: Glassnode
According to Mempool data, the number of unconfirmed transactions in the queue at the time of writing was 259,652, a considerable decrease from the 465,000 seen in early May. A fee of $0.3 was being charged, ruling out prioritizing transactions.
Source: Mempool
Miners’ woes continue
Low transaction fees over blockchain networks work in favor of users, especially when making low-value transactions. This bodes well for the widespread adoption of Bitcoin by retail users.
On the contrary, reduced fees adversely impacts miners’ economics. Miners need to be incentivized to validate transactions and secure the Bitcoin network. They rely on these incentives to cover their hardware and electricity costs.
Read Bitcoin’s [BTC] Price Prediction 2023-24
Bitcoin miners fought the punishing bear market of 2022 with tenacity, expecting to recoup their losses in 2023. However, after achieving yearly peaks in May, their earnings have significantly dried up.
Source: Glassnode