Bitcoin miners face a margin crunch. As block rewards have decreased to 3.125 BTC, the costs of energy have increased, and average costs per block remain low (around 0.02 BTC), it is more difficult than ever to remain profitable. Hashprice is close to $43/PH/day – hardly enough to pay power, much less capex.
Math Doesn’t Add Up Without Fees.
When the average fee is 0.5 BTC per block, miners will get a small boost of approximately 7 US dollars per PH/day. However, the majority of days are not that eventful, which stresses the security budget of the network. Forward curves reveal no improvement in revenue of miners until there is improvement in the fee markets. However this will be conditioned on how the users act and the upgrades of wallets.
Does Protocol Policy Save Margins?
The new Bitcoin Core features such as Package RBF and CPFP have the effect of increasing the amount of fees that go to the ground by enhancing mempool propagation and transaction clustering. They assist miners to monetize idle block space without generating new demand.
The Big Question
Will Bitcoin keep being decentralized and cheap to secure and its rewards become smaller and smaller-or will ideology succumb to economic gravity? Unless on-chain fees increase, marginal miners will be turned off, hashpower will decline and security assumptions could decrease. A real-time stress test of Bitcoin fee market comes next quarter.
