Amid Bitcoin’s recent spike in transaction fees, block number 788695 marks a special milestone for miners: For the first time since 2017, the transaction fees in a single block surpassed the block rewards doled out to miners. Transaction fees in the block clocked in at 6.7 Bitcoin, beating the block subsidy of 6.25 Bitcoin.
Though this spike in fees has thrown a curveball to users, this block shows how it’s benefitting Bitcoin miners, the global network of volunteers that run expensive, specialized computers to secure the Bitcoin network. They’re the ones raking in this newfound treasure trove of fees.
BREAKING: #Bitcoin block 788695 contained transaction fees greater than the block subsidy.
6.7 BTC transaction fees + 6.25 BTC subsidy
This is a the first time in history this has ever occurred due to competitively high block space demand. pic.twitter.com/J7IcwzIVKE
— Joe Burnett (🔑)³ (@IIICapital) May 7, 2023
Bitcoin miners have two sources of income built in for them. One is the block subsidy. Roughly every 10 minutes, miners are awarded 6.25 Bitcoin. This value is split in half every four years in an event known as the Bitcoin “halvening.”
The second source is transaction fees. Users optionally can tag on a fee to every Bitcoin transaction. If there’s more demand for Bitcoin, users need to hike their fee if they want it to get through in a timely manner. There’s been lots of demand recently, pushing the average fee up to $19 according to cryptocurrency statistics website BitInfoCharts.
As such, the transaction fee source of income fluctuates somewhat erratically with demand.
One reason bitcoiners find this surplus in fees so monumental is that eventually — in more than a hundred years — transaction fees will be miners’ sole source of income. But transaction fees fluctuate so often, it hasn’t yet been proven that it will provide a consistent source of income when that time finally rolls around.
Miners are the glue holding Bitcoin together. The more hashing power provided by miners securing Bitcoin, the more secure Bitcoin is. But miners are unlikely to secure the network if they aren’t paid to do it. Therefore it could be bad for Bitcoin if transaction fees don’t increase over the years.
Block 788695 is a small, optimistic sign that fees could increase, even if it hasn’t proved a consistent form of income for miners just yet. As self-custody platform Casa CTO Jameson Lopp put it on Twitter: “The model for thermodynamic security has been proven possible. The only remaining question is if this demand is sustainable.”
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Source: https://decrypt.co/139345/bitcoin-transaction-fees-surpass-block-rewards
