Bitcoin Miners' Revenue Soars 60% in Q4 Due to Inscription Technology

According to Bloomberg, revenue for Bitcoin miners on the blockchain has increased by around 60% to $2.5 billion in the fourth quarter, as fees paid by users minting inscriptions surge. Crypto data analytics firm Coin Metrics reports that this is the highest level of revenue since the first quarter of 2022. Inscription technology is being used to create Bitcoin-based NFTs, which often trade at a fraction of a cent, betting on the resurgent speculative mania gripping the crypto world. Parker Merritt, a solutions engineer at Coin Metrics in Boston, said that this is a notable departure from past waves of fee-market mania, where record-setting fees were directly linked to record-setting Bitcoin prices. The mining subsidy and transaction fees are two major sources of revenue for miners, who use power-hungry specialized computers to validate transactions on the blockchain. The surge in Bitcoin-based NFTs has caused congestion on the Bitcoin blockchain, pushing users to pay miners higher fees to get their transactions finalized ahead of others. Transaction fees in the current quarter have reached levels not seen since early 2021, around the time Bitcoin first breached $60,000. Bitcoin miners have earned about $170 million in transaction fees in the form of the digital asset this month, making up 20% of the total mining rewards as of December 18, according to a report by crypto-mining researcher the MinerMag. The miners have made $328 million from the fees so far in the current quarter, Coin Metrics said. Inscriptions, also called ordinals, are a new class of NFTs made possible through the protocol Ordinals created by Bitcoin developer Casey Rodarmor. They became one of the most popular digital assets in early 2022 as the tokens are minted on the Bitcoin blockchain as opposed to its rival Ethereum, which has been the largest platform to create and trade NFTs. However, high-profile Bitcoiners like Adam Back argue that the large amounts of data required from inscriptions on Bitcoin could crowd out financial transactions and derail the blockchain's mission to be a decentralized peer-to-peer payment system.