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Bitcoin Network Congestion Leads to Windfall for Miners

As the Bitcoin network becomes increasingly busy, miners are reaping rewards like never before. A recent surge in transaction fees has resulted in a significant increase in miner income, with fees for a specific block reaching a staggering 8.05 BTC.

On December 16th, the average transaction fee hit the second-highest level of the year. This boon for [BTC] miners comes as they have collected total fees exceeding the fixed block subsidy multiple times over the past 24 hours.

Transaction Fees Surpass Block Rewards

This week, the SEC endeavored to challenge this decision by filing an appeal. The regulatory body contended that the classification of XRP should consider its “wider framework,” specifically highlighting investors who purchased XRP with the anticipation of profits steered by Ripple’s activities. 

This line of reasoning, however, did not sway Judge Torres. She asserted that only specific criteria need to be satisfied for an asset to be categorized as a security, disregarding the notion that investor expectations based on Ripple’s actions should play a role in this determination. Accordingly, Judge Torres dismissed the SEC’s appeal request, offering no additional commentary.

Incentivizing Miners for Network Security

It’s well-known that miners require incentives to maintain the security of the Bitcoin network and verify the multitude of transactions that occur daily.

As the collective subsidy is designed to decrease exponentially and eventually reach zero, the focus is shifting towards fee income.

Signs of High Network Traffic

The past year saw a significant rise in daily fees. According to Glassnode, on December 16th, miners earned an average of 0.00059 BTC, the second-highest level since the peak in early May.

High average fees indicate the urgency of transactions and block congestion. AMB Cryptocurrency’s scan of the Mempool found 314,267 transactions waiting in the queue at the time of writing.

Each block’s memory consumption exceeded the 300 MB limit, reaching 1.36 GB, leading to the network discarding transactions below 17.6 sats/vB or Satoshi per byte.

Even transactions with a fee of 301 sats/vB, equivalent to $18.59, were assigned lower priority. On the other hand, users willing to pay 377 sats/vB, or $22.28, were given the highest priority.

Miners Profit Amidst Rising Fees

The increase in transaction fees has offset the sharp rise in computing power, thereby pushing up the price of mining. Data from Hashrate Index shows that the hash price soared to $127 per day per PetaHashes (PH/Day), the highest level since May.

Hashrate is a crucial barometer of miner profitability and is positively correlated with transaction fees.

 

Sentiment: Positive

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