Bitcoin Transaction Fees Drop Despite Robust Activity
• Bitcoin fees dropped to their three-month low despite a rebound in transaction numbers.
• The decline in fees came despite a sharp increase in on-chain trading activity.
• Low transaction fees could hurt miners’ economics but benefit users making low-value transactions.
Sharp Increase In On-Chain Trading Activity
Bitcoin transaction numbers witnessed a robust recovery in July after weeks of downtrend. According to IntoTheBlock, the total fees collected on 14 July stood at $3.6 million, marking a 37.7% increase from the previous day. Source: Glassnode showed that the transaction count last weekend reached its highest level since the BRC-20 euphoria of May.
Decreased Block Interval
At the same time, there was an uptick in the network hash rate which caused block intervals to dip significantly as more blocks were added to the chain. This meant that transactions could be processed quickly without people needing to bid up their fees to jump the line. Source: Mempool showed that the number of unconfirmed transactions in the queue at the time of writing was 259,652 – a considerable decrease from 465,000 seen in early May and with an average fee of $0.3 being charged for each transaction.
Impact On Miners Economics
Lower transaction fees on blockchain networks are beneficial for users making low-value transactions; however, it adversely impacts miners’ economics as they need incentives to validate these transactions and earn rewards accordingly.
In conclusion, while decreased transaction fees benefit smaller retail user activities over Bitcoin network, it does not bode well for miners as their economics suffer due to lack of incentives associated with processing lower value transactions on this blockchain network