Bitcoin (BTC) miners enjoy windfall profits as transaction fees spiked to the highest since April 2021 due to rising Ordinals inscriptions.
The average price of transactions on the Bitcoin blockchain surged over $37 Sunday, a level last seen in April 2021, at the height of the bull market peak, data by BitInfoCharts shows, up from an average of $1-$2 in September and early October.
The surge is mainly driven by the resurgence of Ordinals, a protocol that allows users to store non-fungible tokens (NFTs) on the Bitcoin blockchain called inscriptions.
Users created over 1.2 million new Ordinals inscriptions from Friday to Sunday, according to a Dune Analytics chart by crypto asset management firm 21.co, clogging the network with some 300,000 transactions waiting for confirmation.
The popularity of Ordinals have divided the Bitcoin community, with core developer Luke Dashjr calling them “spams” in need of fixing. However, sky-high fees have proved a boon for BTC miners.
Miners, who earn BTC for processing blockchain transactions, now generate some $63 million daily income from fees or $23 billion on an annual basis, almost quadruple of the two-year average, a Monday report from 10x Research noted.
“Despite bitcoin being range-bound, the BTC mining stocks are still performing well and are on fire with extraordinarily high fees being generated,” said 10x Research’s Markus Thielen, who is also the head of research at Matrixport.
Bitcoin mining stocks have also outperformed BTC price recently, Thielen added. While BTC is up 7% in December, mining stocks such as Marathon Digital (MARA), Riot Platform (RIOT) and Cleanspark (CLSK) rallied 15%-40% during the same period.