Bitcoin Transaction Costs Surge to a 2-Year Peak Amidst Ordinals Bonanza, Granting Lucrative Gains for BTC Miners

The shares of publicly traded bitcoin mining companies are witnessing an impressive surge, fueled by the escalating transaction fees, according to market analysts.

Bitcoin network fees have surged to over $37, reaching the highest level since April 2021. This surge is attributed to the increasing popularity of Bitcoin NFTs known as Ordinals. The rise in transaction fees is proving to be beneficial for publicly listed bitcoin miners, surpassing the relatively stable BTC price.

Bitcoin (BTC) miners are enjoying substantial profits as transaction fees reach levels not seen since April 2021, driven by the growing adoption of Ordinals inscriptions. BitInfoCharts data reveals that the average transaction price on the Bitcoin blockchain exceeded $37 on a recent Sunday, a significant increase from the $1-$2 range observed in September and early October.

The surge is primarily fueled by the resurgence of Ordinals, a protocol that enables users to store non-fungible tokens (NFTs) on the Bitcoin blockchain through inscriptions. Over the weekend, users created over 1.2 million new Ordinals inscriptions, according to a Dune Analytics chart by crypto asset management firm 21.co, leading to a backlog of 300,000 transactions awaiting confirmation.

While the resurgence of Ordinals has sparked debate within the Bitcoin community, with some, including core developer Luke Dashjr, labeling them as "spams" in need of fixing, the substantial fees have proven to be advantageous for BTC miners.

Miners, who earn BTC by processing blockchain transactions, are now generating a daily income of approximately $63 million from fees, amounting to $23 billion annually. This figure is nearly four times the two-year average, as highlighted in a recent report from 10x Research.

Markus Thielen, Head of Research at Matrixport and an analyst at 10x Research, noted, 

"Despite bitcoin being range-bound, the BTC mining stocks are still performing well and are on fire with extraordinarily high fees being generated."

Furthermore, Bitcoin mining stocks have outperformed the BTC price in recent times. While BTC experienced a 7% increase in December, mining stocks such as Marathon Digital (MARA), Riot Platform (RIOT), and Cleanspark (CLSK) witnessed rallies ranging from 15% to 40% during the same period.

December Showdown: Analyzing the Performance Battle Between BTC Price and Bitcoin Mining Stocks (TradingView)  

Caleb Franzen, the founder of Cubic Analytics, suggested that BTC mining stocks may also benefit from a robust performance in the equity markets. 

"Bitcoin miners have continued to perform well over the past several trading sessions, despite stagnation in the underlying price of BTC price,"

 he noted on X. 

"It's a ripple effect from strong & broad-based equity performance."

#Bitcoin miners have continued to perform well over the past several trading sessions, despite stagnation in the underlying price of $BTCUSD.

It's a ripple effect from strong & broad-based equity performance.

I think we've hit an inflection point in the thesis.

— Caleb Franzen (@CalebFranzen) December 18, 2023

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