Bitcoin Miners Struggle as Rewards Shrink and Fees Plunge Post-Halving
Despite BTCs spot price hovering near $95,000, miner revenues have not kept pace, with multiple indicators highlighting sharp contractions in profitability.
Declining Fee Contribution
One of the most notable shifts post-halving is the decline in transaction fees as a share of total miner revenue. Currently, fees account for just 1.48% of block rewardsone of the lowest ratios observed since early 2023. This drop reflects waning demand for on-chain block space.
Temporary fee spikes from events like the launch of Runes and activity surrounding Ordinals pushed average fees to $127 per transaction in April 2024. However, those spikes proved fleeting. Fee levels have since collapsed below $2, suggesting that transaction-based miner compensation is proving unsustainable.
Stagnant Hashprice Despite Price Rally
The hashpricerepresenting miner earnings per petahash per second (PH/s)has failed to rise alongside Bitcoins surging spot price. As of late April 2025, hashprice stood at $48.9 per PH/s/day. This stagnation contrasts sharply with previous bull cycles, where hashprice typically surged with BTCs value.
The current discrepancy has left many mining operations underwater. Mining rigs operating at 2538 J/TH only generate around $0.06 per kWhbelow the U.S. grid electricity average of $0.08. This implies negative margins for even moderately efficient miners, forcing smaller or higher-cost operators to consider powering down or upgrading hardware.
Broader Implications for Bitcoins Security Model
The reduced fee contribution and stagnant hashprice spotlight a broader concern about Bitcoins long-term security model. As block subsidies continue halving every four years, the network is expected to rely more heavily on transaction fees to incentivize miners. However, with off-chain solutions like the Lightning Network serving over 650 million indirectly connected users, on-chain activity appears increasingly insufficient to fill the revenue gap.
The sustainability of miner incentivescrucial to the networks securitymay depend on new innovations in layer 2 adoption, fee market mechanics, or even protocol-level changes.
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