By George Ward
BTC Fees Soar To Six-Month High
BTC’s price fell to $34,884 on November 7, causing investors to be concerned. At the same time, the average cost of a Bitcoin transaction has risen to nearly $6, the highest in almost six months.
The increase in transaction fees is due to intense competition and the resurgence of Bitcoin Ordinals, which are on-chain transactions that demand larger fees for block space. This situation is similar to what was observed in the second quarter of 2023.
As more people join the Bitcoin network and conduct transactions, the demand for limited block space will grow. As a result, users become more willing to pay more to ensure that their transactions are completed on time.
This development emphasizes the volatile nature of the crypto market, where factors like increased activity and competition usually affect transaction costs.
Spike In The Number Of Bitcoin Ordinals
Meanwhile, Ordinals, a type of nonfungible token (NFT) built on the Bitcoin blockchain, are creating a buzz in the Bitcoin community. These tokens usually store data directly on the blockchain, but the recent increase in the number of BRC-20 Ordinals is posing problems for Bitcoin miners.
The influx of these tokens causes a rise in the number of transactions for miners to process on-chain, causing mempool congestion and increased competition for confirmations. Hence, creators seek to pay higher fees to ensure timely transaction processing.
As a result, Transactions with insufficient fees may experience confirmation delays. According to GeniiData, nearly 1 million ordinal “mints” have occurred in the last week alone.
During this time, the most active projects have changed. BEES, gpts, and HALV have emerged as the leading entities in ordinal minting. Per data from Mempool.space, there is a backlog of more than 120,000 unconfirmed transactions in the mempool, highlighting the strain on the Bitcoin network.
This rise represents a substantial increase from the beginning of October when the queue had less than 30,000 pending transactions. The rise in ordinals is gradually reshaping the Bitcoin ecosystem, emphasizing the importance of users’ adaption to changing conditions in the crypto market.
Bitcoin Miners Reap Rewards Amid Speculations
Meanwhile, the broader crypto community has shared their insights on whether this trend will cause Bitcoin transaction fees to keep rising. Many opined that the transaction fees will continue to soar because when existing minting projects end, new ones will replace them and keep pushing up the transaction fees.
Nevertheless, Bitcoin miners are benefitting from the trend as their profits from the fee are rapidly increasing. According to the on-chain analytics platform Glassnode, the surging fee rates accounted for 8.5% of miners’ revenue on November 6.
This also represents the highest daily proportion since early June, demonstrating the impact of the fee increase on miners’ profitability. Furthermore, the changing transaction fees in the Bitcoin network illustrate the volatile nature of the crypto market.
Even though BTC recently scored a landmark by breaching the $30,000 price level following weeks of bearish sentiments, the surging transaction fees have undermined this accomplishment. However, some analysts believe the current situation is temporary, as Bitcoin will likely flip the trend in the coming weeks.
At the time of writing, BTC is up 0.8% in the last 24 hours and trades at $35,253.