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The new “flippening”: Bitcoin fees surpass block reward for miners
Yesterday, saw a Bitcoin transaction fee flip a Bitcoin block reward for the first time since 2017 — miners earning more from fees.
This article was published 3 years ago. Some details may no longer reflect current market conditions or recent developments. If you spot anything that needs an update, contact us.
Quick Take
- Bitcoin fees have started to explode due to the emergence of BRC-20 tokens.
- Taproot made it easier for “Ordinals” to enter the Bitcoin blockchain.
- The mempool is processing as designed, but as a result, the fees are adjusting much higher.
- This results in one of if not the highest recorded transaction fees ever.
- This has potentially sorted out Bitcoins security model; when the block reward diminishes, will the miners continue to mine? Would they be incentivized enough?
- Miners, for the first time since 2017, are getting paid more than the block reward; in block 788695, miners were paid 6.701 ($193,075) in fees. At the same time, the block reward was 6.25 BTC.
- However, if you use the Bitcoin blockchain for payments, your fees have gone up, but this is the work of a free capital market. If people want to continue minting tokens via “ordinals,” they hope to sell for more than the cost of mint.
- For historical context, 31.7% of miner revenue has come from fees over the last 24 hours.
