Monday Mining Metrics: Mempool Clears. Is Bitcoin Dead?
Bitcoin Mining Update - 2/3/2025
Bitcoin Mining x Ordinals
The Blockware team has been working on a project in stealth-mode for the past year: Hashrate Hackers. This project is bridging the gap between Bitcoin miners, ordinals, and institutional investors.
We’ll have more to share on this in the near future, but for now, check out this exclusive CoinTelegraph interview featuring Blockware CEO, Mason Jappa, and Founder of Eden Block VC, Lior Messika, discussing Hashrate hackers.
https://x.com/Cointelegraph/status/1885357432643477956
Mempool Clears, Transaction Fees Drop to Nearly Zero, is Bitcoin Dead?
The ‘Mempool’ – short for “memory pool” – is a collection of Bitcoin transactions that are “in the queue”, so to speak.
Due to the limited amount of data that can be included in each Bitcoin block, miners tend to include the transactions that are paying the highest fee (measured in sat/vByte). Users who want to send Bitcoin on-chain, but aren’t necessarily in a hurry to have the transaction processed, will broadcast transactions with a low-fee rate. The transaction will then wait in the mempool until there’s less demand / competition for block space, at which point miners will begin including these lower-fee transactions.
Over the weekend, the mempool cleared for the first time in two years, and transactions paying the lowest possible fee rate, 1 sat/vByte, were included in blocks. Moreover, as the mempool cleared, multiple “half empty” blocks were mined – blocks that were not full data-wise because there weren’t enough outstanding Bitcoin transactions to include.
This resurfaced a debate about Bitcoin’s “security budget” – with the claim from naysayers being this: “If nobody is sending Bitcoin on-chain, miners will go bankrupt and the network will no longer be secure.”
This is an incorrect analysis for a variety of reasons:
Bitcoin miners earn revenue even if there are no transactions in a block.
Mining economics are a constantly adjusting equilibrium
Let’s attack these points one-by-one.
Bitcoin miners earn revenue even if there are no transactions in a block.
There is a “subsidy” awarded to Bitcoin miners for each block successfully mined – the subsidy is newly created Bitcoin and the amount that miners earn per block is cut in half every 210,000 blocks (roughly every four years).
Even if zero transactions are included in a block (and thus no fee revenue), miners will still receive the subsidy, which is ~3.125 BTC (~$300,000) right now. If your perception of Bitcoin’s “security” hinges on revenue for Bitcoin miners, then we are still quite a few decades out from a “transaction fees only” based revenue model for Bitcoin miners.
Mining Economics are a Constantly Adjusting Equilibrium
Unlike other commodities, the “difficulty” of producing (mining Bitcoin) is programmatically adjusted every 2,016 blocks. If Bitcoin miners are unprofitable they turn off their machines, then blocks start getting mined more slowly, and in response, the difficulty of mining automatically decreases. If for some reason miner revenue decreased significantly, difficulty would continue to adjust down until only the most efficient miners remain in operation.
Over time, mining difficulty has increased substantially, indicating health and profitability amongst Bitcoin miners.
Bitcoin Miner Revenue – $48 Million per Day
Despite the noise, Bitcoin miners are collectively earning roughly ~$48 million per day – this is the highest amount of revenue for miners since the halving in April of 2024. Moreover, miner revenue, while volatile, is in a long-term uptrend, in spite of the fact that the BTC block subsidy is cut in half every four years.
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