In 2024, Bitcoin miners faced a significant drop in fee revenue. Over the past month, daily fees on the network fell to yearly lows, now totaling about $300,000 per day. This is half the amount seen in early January, when fee revenue reached $600,000, and far below the peaks of the first half of the year, which climbed to $900,000. Until early autumn, daily fees did not fall below $340,000.
Current Situation with Bitcoin Miners' Revenue
Miners' revenue consists of two parts: the block reward for adding new blocks and network fees for processing transactions. Currently, the main source of profit is the block reward, which has been 3.125 BTC (about $285,000) per block since spring 2024. At the same time, transaction fees bring miners less than 1% of their total income. For example, on November 19, 2024, total miner revenue was $42.38 million, of which only $313,000 came from fees.
Reasons for the Drop in Fees and Its Impact
The main reason for the drop in fees is decreased user activity and fewer transactions on the Bitcoin network. This indicates that Bitcoin is being used less frequently for transfers, which directly affects miners' fee income. Since the Bitcoin blockchain is primarily designed for monetary transfers rather than user applications, the potential for fee growth is limited.
Miner Rewards and Long-Term Prospects
The block reward halves every four years. Since 2024, it has been 3.125 BTC, and miners have only about 5% of all possible bitcoins left to mine. By 2140, the block reward will have almost disappeared, leaving miners almost entirely dependent on fees. However, at current activity levels, fees cannot yet provide the previous level of income. See also: Bitcoin Mining Difficulty Drops in November 2023: Reasons and Outlook
Expert Opinions and Mining Market Forecasts
Fred Thiel, head of MARA Holdings, notes that if current fee levels persist, mining will become unprofitable unless the price of Bitcoin grows by at least 50% per year. In his view, only companies that can generate their own electricity and diversify their business—such as by using equipment for artificial intelligence—will survive.
Why This Matters
For Russian miners, the drop in fee revenue means that relying solely on the standard mining model is becoming increasingly difficult. Reduced network activity and falling fees could lead to lower profitability, especially for those paying high electricity costs or renting capacity.
What to Do?
- Assess your costs and consider ways to reduce electricity expenses.
- Monitor changes in the Bitcoin network and fee trends to respond promptly to market shifts.
- Explore business diversification opportunities, such as using equipment for AI or computational tasks.
- Plan for the long term, taking into account the decreasing block reward and potential rise in mining competition.
