Bitcoin miners are beginning to experience pressure as they adjust to halved rewards following the halving event. While there was a temporary relief due to a surge in network fees, the subsequent decrease in transaction fees is now exacerbating their financial challenges.
Miners of Bitcoin Face Increasing Pressure Following Halving Due to Falling Fees
Following the reduction, Kaiko Research recently noted an increase in daily average network fees. This spike temporarily eased some of the hardship experienced by Bitcoin miners.
But the initial rush of users to adopt the Runes protocol has subsided. Rune Analytics reports that transactions have dropped by more than 4,500%. By May 14, they had dropped from 753,814 on April 24 to 16,630.
To pay for the expenses of making new blocks, miners are frequently forced to sell Bitcoin during halving occurrences. Even if the fee increase helped lessen some of the selling pressure, the current charge decrease may cause it to resurface.
Marathon Digital, holding 17,631 BTC valued at over $1.1 billion, and Riot Platforms, holding 8,872 BTC worth more than $500 million, are among the miners facing potential pressure to sell part of their holdings in the near future, according to the report.
Additionally, the summer months typically witness a decrease in trading activity and liquidity. Last August, the market depth declined to as low as $250 million. This seasonal trend could further complicate matters for miners and the broader crypto market.
Crypto analyst Maartun echoed the findings of Kaiko Research, highlighting that Bitcoin miners' profitability has reached a three-year low due to reduced block subsidies and relatively low transaction fees.
Despite the current challenges, crypto analyst PlanB remains optimistic about the long-term prospects. PlanB believes that Bitcoin miners' revenue will recover within 2 to 5 months as Bitcoin's price doubles.
"As Bitcoin miners navigate through the aftermath of the halving, their financial resilience is put to the test. While facing fluctuating fees and market conditions, there are both challenges and opportunities ahead. With a projected recovery in miner revenue, the upcoming months are critical for the sector's stability and expansion."
May 2024, Cryptoniteuae