Just one day after the fourth Bitcoin halving event, which saw average transaction fees soar to a record $128, the fees have dramatically decreased. On April 21, the cost for medium-priority Bitcoin transactions dropped to between $8 and $10, as reported by mempool.space.
The spike in fees on April 20, coinciding with the halving, led to Bitcoin generating $78.3 million in total fees, surpassing Ethereum’s fee generation by more than 24 times, according to Crypto Fees. This peak in transaction costs was influenced by a rush of activity around block 840,000, which was mined by ViaBTC. This block became a historic marker in Bitcoin’s 15-year history, not only for its timing with the halving but also for being the block in which enthusiasts competed to record transactions for memecoins and NFTs using the newly introduced Runes protocol.
- Record Fee Block: A total of 37.7 Bitcoin ($2.4 million) was paid in fees for block 840,000 alone.
- Transaction Volume: The block contained 3,050 transactions, averaging nearly $800 in fees per transaction.
Post-Halving Fee Adjustments
Following the halving, which reduced the block reward from 6.25 to 3.125 Bitcoin, miners initially saw no significant impact due to the high transaction fees. However, fees normalized quickly after the event, dropping to typical levels of 1-2 Bitcoin per block by block 840,200. This reduction means that the compensation from fees alone no longer offsets the reduced block reward.
- Normalization of Fees: After an initial spike, fees returned to lower, more typical levels.
- Impact on Miners: The reduction in fees alongside the halving of block rewards affects miner revenue.
Comparison with Ethereum
In the days leading up to and following the halving, Bitcoin fees consistently exceeded those of Ethereum. From April 15 to April 20, Bitcoin maintained higher fee revenues, with a 7-day average reaching $17.8 million. This period marks a notable shift in the fee dynamics between the two leading cryptocurrencies.
- Dominance in Fees: Bitcoin outperformed Ethereum in transaction fee revenues for six consecutive days.
- Ongoing Comparison: The competition between Bitcoin and Ethereum in terms of transaction fees continues to be a point of interest.
Market Reaction to the Halving
Despite the significant operational changes and the excitement around the halving, Bitcoin’s market price remained relatively stable. As of the latest update, Bitcoin’s price saw a modest increase of 1.5% post-halving, trading around $64,840 according to CoinGecko.
- Price Resilience: Bitcoin’s price showed resilience, with only a slight increase following the halving.
- Investor Sentiment: The stability suggests that the halving was largely anticipated and factored into the market dynamics.
The recent halving event has underscored Bitcoin’s evolving economic model, highlighting the impact of transaction fees on miner revenue and the overall network security. As Bitcoin continues to mature, the interplay between block rewards, transaction fees, and miner profitability will be crucial in shaping its long-term viability and stability. The fluctuating fees and their quick stabilization post-halving reflect the dynamic nature of Bitcoin’s market and the adaptability of its participants.
Featured image credit: Jievani Weerasinghe via Unsplash