Bitcoin transaction fees have reached a five-month peak, with the average fee approaching $6 as of November 7. This surge in fees is attributed to a new wave of inscriptions, which has increased competition for block space.
Ordinals, a type of non-fungible tokens (NFTs) that store data directly on the blockchain, are believed to be the main cause of this increase. BRC-20 ordinals can add significant transaction numbers for Bitcoin miners to process on-chain, leading to a congested mempool and resulting in more competition for confirmations.
This, in turn, necessitates higher fees, and transactions without them will confirm much more slowly than normal. Statistics from GeniiData reveal that almost one million ordinal “mints” have occurred in the past seven days. As of the current update, there has been a shift in the most active projects. The projects that are seeing the most activity from minters are BEES, gpts, and HALV.
The Impact of BRC-20 Ordinals on Bitcoin’s Mempool and Miners’ Revenue
Reports indicate that the BRC-20 coin, $RATS, is causing congestion in the mempool, leading to a noticeable increase in Bitcoin transaction fees. Current data from Mempool.space shows that Bitcoin’s mempool is dealing with a backlog of over 120,000 unconfirmed transactions.
On the other hand, at the start of October, the queue contained less than 30,000. This situation is reminiscent of Q2 this year when block space was being taken up by ordinal inscriptions. The last time transaction fees on the Bitcoin network were this high was in June, which was also the last month Bitcoin Ordinals recorded over $100 million in secondary sales.
While this situation may be frustrating for those attempting to send on-chain BTC transactions, it is proving beneficial for Bitcoin miners. According to on-chain analytics firm Glassnode, for November 6, 8.5% of miners’ revenue came from the increased fee rates the biggest daily proportion since early June.
The recent surge in Bitcoin’s value in October has not only escalated its worth but also amplified the network’s demand. Consequently, the cost of transactions has skyrocketed, making it pricier for users to carry out transactions on the Bitcoin network. This pattern underscores the obstacles that the Bitcoin network encounters in scaling to accommodate growing demand while keeping transaction expenses at a manageable level.
