The average fees associated with each Bitcoin transaction fell to their lowest on July 7 at $38.69, a figure last seen at the peak of the COVID-19 pandemic in 2020.
The cost per Bitcoin (BTC) transaction for the day is determined by the miners’ revenue and the total number of transactions processed. On July 7, Bitcoin was trading above $58,200 when transaction costs came down as two key factors — lower demand for block space and data volume — came into play.
Bitcoin miners maintain profitability amid lower fees
Bitcoin miners processed 673,752 transactions over the Bitcoin network on July 7, according to Ycharts data. BTC represented 89.7% of the transactions, and the rest of the bandwidth was taken up by other protocols, such as Ordinals (0.7%), BRC-20 (4.1%) and Runes (5.4%).
Bitcoin miners’ revenue for the day represented 1.14% of the transaction volume, an average share over the past six months. Despite lower average transaction costs, miners benefitted from reduced network difficulty, which allowed them to process transactions using comparatively lesser computational power.
Dialing down mining operations
Reading into the turbulent crypto market, market intelligence firm CryptoQuant said Bitcoin miners are showing signs of “capitulation” as profit margins tighten in the post-halving climate and BTC price falls close to $50,000.
Miner capitulation is the process of reducing operational costs or selling a portion of Bitcoin earnings to stay afloat during uncertain market conditions.
CryptoQuant analysts highlighted multiple signs of capitulation that emerged over the last month, one of which was the significant decline in Bitcoin’s hashrate.
“Bitcoin Miner capitulation mirrors December 2022 levels with a 7.7% hashrate drop, similar to post-FTX collapse conditions. Such declines often signal potential market bottoms.”
The CryptoQuant report also noted that miners have been “extremely underpaid,” as evidenced by the miner profit/loss sustainability indicator for most of the period since the halving, as shown below.
As a result, miners have seen a 63% decline in daily revenues since the halving when Bitcoin’s base block rewards and transaction fee revenue were higher.