On April 20, Bitcoin experienced an unprecedented surge in block fees, reaching a staggering average of $128. This surge coincided with the fourth Bitcoin halving event, compensating for the reduced block subsidy miners faced. Merely a day later, on April 21, the average fees on Bitcoin plummeted sharply to $8-10 for medium-priority transactions, marking a significant decrease from the previous day’s record high.
Average daily transaction fee on Bitcoin over the last 5 years. Source: Y Charts
Record Breaking Fee Revenue
The day of the halving saw Bitcoin rake in $78.3 million in total fees, surpassing Ethereum by over 24 times, as reported by Crypto Fees. Notably, a single block at height 840,000 rewarded a miner with an astounding 37.7 Bitcoin, equivalent to $2.4 million, making it a historic moment for the network.
Block 840,000 witnessed remarkable demand, driven by enthusiasts of memecoins and non-fungible tokens (NFTs) vying to secure rare satoshis using the Runes protocol. This resulted in 3050 transactions being included in the block, with users paying an average of nearly $800 each.
Largest fees by blockchains and decentralized finance projects on April 20. Source: Crypto Fees
The elevated block fees persisted until approximately block 840,200 before gradually declining to around 1-2 Bitcoin, as observed on mempool.space.
Impact of Halving on Miners
Initially shielded by the substantial block fee payouts, miners were somewhat insulated from the halving of the block subsidy from 6.25 Bitcoin to 3.125 Bitcoin. However, with the average block fee now below 3.125 Bitcoin, miners are feeling the impact more acutely.
Source: Total fees for block 840,266 came out at 1.64 BTC. With the new block subsidy of 3.125, total rewards came out at 4.76 BTC. Source: mempool.space
For six consecutive days leading up to April 20, Bitcoin outpaced Ethereum in fee revenue, with a 7-day average of $17.8 million, highlighting its dominance in this aspect.
Despite the events, the Bitcoin halving did not cause any material fluctuations in the crypto price. Bitcoin value has remained relatively stable, witnessing a modest 1.5% increase since the halving to reach $64,840, according to CoinGecko.
Final Thoughts
In short, the Bitcoin network fee dynamics during the halving showcased both the resilience and volatility inherent in its decentralization. From record highs to swift declines, the landscape of Bitcoin fees continues to evolve, reflecting the intricate interplay between network demand, miner incentives, and market forces.
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