Since January 28, 2024, the number of daily transactions on the Bitcoin network has significantly decreased, peaking at over 600,000 and now hovering around 300,000 per day. This decline coincides with a reduction in the number of Ordinal inscriptions created each day, which eases congestion and lowers onchain costs overall.
Bitcoin Network Activity Slows as Ordinal Inscriptions Fall
According to data from February 17, 2024, 327,713 transactions were completed by bitcoin miners in a single day. Daily transaction volume has significantly decreased in February compared to the 636,523 transfers that were registered on January 28.
After then, there has been a steady decline in the number of transactions, with a monthly low of 278,098 transactions on February 6. This decrease is consistent with the month-long decrease in the number of Ordinal transactions.
There has been a discernible decline in the quantity of inscriptions created since February 3, when well over 300,000 were created in a single day. The figure fell to just 35,814 inscriptions for the day just three days later.
Because of the resulting spike in demand for block space, this decrease in inscriptions has resulted in fewer transactions, which has decreased the fees that miners previously received in December 2023 and January 2024. Miners have noticed a slight alleviation of mempool congestion this month, as the number of unconfirmed transactions has decreased from above 200,000 prior to February 9 to 139,625.
The average transaction price has dropped significantly as a result of the decreased activity, from a high of $14.81 on February 3 to just $4.56 per transaction, or 27 satoshis per virtual byte, at this time. The average Bitcoin transaction price has also decreased, from $4.16 to $1.75, or 10.4 satoshis per virtual byte, as of right now.
Miners have made over $816 million this month, with over $47 million coming from onchain transaction fees, despite the decline. Furthermore, from a peak of $92 on February 14 to the current $82 per PH/s, the hash price—which represents the daily worth of one petahash per second (PH/s) of hashing power—has declined.
This change in the transaction landscape of Bitcoin, which is marked by a significant drop in fees and daily activity, suggests that the network’s economy may need to realign. It appears possible that the ecosystem is about to enter a stabilizing phase as miners get used to the new normal of lower earnings and users gain from cheaper fees.
As the fourth halving event of Bitcoin approaches with less than 9,000 blocks left, the growth of Ordinal inscriptions, the rising demand for block space, and the fees have become critical components in keeping bitcoin miners afloat in the future. Given that they could see a 50% reduction in revenue in April, this support might be essential
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