- Increased block space demand on the BTC network has led to a rise in transaction fees.
- This has resulted in a jump in total miners’ revenue.
The recent surge in the price of Bitcoin [BTC] has caused a significant shift in mining activity on the BTC network. Pseudonymous CryptoQuant analyst Onchained found that the 68% jump in the year-to-date value of the king coin has resulted in an increase in fees per transaction due to the increased demand for block space.
Unchained noted that the rally in BTC’s price since the year began has led to high network activity on the Bitcoin blockchain. As a result, there has been a surge in demand for block space on the network. And users have had to attach a fee to incentivize miners to prioritize their transactions over others in the mempool, leading to a rise in total miners’ fees.
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On why the demand for block space on the Bitcoin network has rallied significantly recently, the analyst noted:
“It appears that Bitcoin is being withdrawn from exchanges at a rapid pace, which could be the primary reason for the rise in transaction fees. This is likely due to holders who are seeking to keep their Bitcoin safe outside of exchanges. The banking crisis in the USA has led to an increase in the number of people withdrawing their Bitcoins from exchanges. As more people lose faith in the traditional banking system, they are turning to cryptocurrencies as a means of securing their assets.”
Another analyst Achraf Elghemri assessed miners’ revenue on the Bitcoin network and found that increased transaction fees on the network caused by the uptick in block space demand have resulted in higher returns for miners.
Elghemri considered BTC’s Puell Multiple Index and found that the total amount of BTC earned by miners to process transactions on the network has grown “as a result of collecting the gains of the rising market and covering the costs of mining.”
According to data from Glassnode, total miners’ revenue rallied to a high of 1,182 BTC on 23 March, the highest the chain has seen in the last three months.
BTC holders have a good reason to smile
Since the year began, the 68% jump in BTC’s value has put many of its holders in profit – the most they have seen in the last year.
Data from Santiment showed the coin’s MVRV ratio at 43.17%. This indicated that if all BTC holders sell their coins at the current market price, they can expect to generate an average profit of two times their initial investment.
Read Bitcoin’s [BTC] Price Prediction 2023-24
Further, for most of the year, BTC’s Network Profit/Loss ratio metric has returned only positive values. In the wake of Silicon Valley Bank’s collapse, this metric suffered a significant dip as “weak hands” exited the market due to the decline in BTC’s value.
This, however, made way for “new money,” which re-entered the market and drove up the coin’s price with the required liquidity.