This year, Bitcoin ordinals and inscriptions have significantly impacted block space utilization, bolstering miner revenue through increased transaction fees. However, miners face challenges on the horizon as the impending halving event approaches.
Since their introduction in February 2023, inscriptions have actively participated in the cryptocurrency ecosystem, buying up block space and filling the mempool. They have primarily occupied the remaining space after higher-value monetary transfers.
Despite their contribution to transaction fees, analytics provider Glassnode reported that the number of pending transactions in its mempool has notably increased since May. Most of these unconfirmed transactions have a minimal data footprint. Inscriptions are sensitive to absolute fee amounts and can be displaced by more urgent monetary transfers.
Glassnode pointed out that the surge in text-based inscriptions aligns with the rise in pending transactions, confirming that these compact inscriptions have become a significant driver of demand for block space.
However, the picture could be clearer for miners. Despite the increased fees generated by these inscriptions, their overall income remains relatively low. The hash price, measured in dollars per terahash per second per day, has hit an all-time low, currently at just $0.059, according to the Hashrate Index. This marks a 50% drop from the Bitcoin ordinals surge in May and an 85% decrease from the bull market’s peak at $0.40.
Miners are now set to earn only 2.26 BTC per Exahash active on the network, putting them under income stress and unprofitability unless the price of BTC experiences a significant surge. The halving event scheduled for April or May of the coming year will further reduce their block rewards to 3.125 BTC.
Glassnode underscored the fierce competition in the mining industry, emphasizing that the relentless decline in hash prices demonstrates its cut-throat and unforgiving nature.
In conclusion, while inscriptions have brought additional demand for block space, the looming halving event and intense miner competition cast uncertainty on miners’ profitability. Their fate will largely depend on the future trajectory of BTC prices, which currently stand at $26,236 during the Wednesday morning Asian trading session.
