According to Cointelegraph, Fractal Bitcoin, a sidechain scaling solution for Bitcoin (BTC) using the Bitcoin core code, presents a dual-edged opportunity for miners. This solution, which is merge-mined alongside Bitcoin, allows miners to use the same hardware to mine both Bitcoin and Fractal Bitcoin simultaneously. This could potentially enhance miner profits in the post-halving environment without the need for retooling facilities for AI or high-performance computing.
However, the introduction of Fractal Bitcoin also poses a risk to miner revenues. By supporting the BRC-20 token standard and offering a faster, cheaper scaling solution for the Bitcoin base layer, Fractal Bitcoin could reduce network fees generated by the demand for non-fungible tokens on the Bitcoin network, thereby decreasing miner profits.
Despite a decline in the initial hype around Bitcoin Runes, ordinals, BRC-20 tokens, and inscriptions, these tokenized assets continue to provide a significant source of revenue for Bitcoin miners. Following the halving event in April 2024, the minting of Bitcoin Runes contributed 1,200 BTC in network fees to miners by the end of that month, initially offsetting the decreased block subsidy. Since then, Bitcoin Runes have generated approximately $162.4 million in fees, excluding other tokenized assets on the Bitcoin network.
The potential success of Fractal Bitcoin and other Bitcoin layer-2 solutions could mirror the revenue collapse experienced by Ethereum's layer-1 network. Since the launch of the Dencun upgrade in March 2024, which significantly reduced fees for Ethereum’s layer-2 transactions, Ethereum network fees have steadily declined. This reduction led to a surge in Ethereum layer-2 networks and increased competition to offer the fastest and cheapest scaling solutions. Consequently, fees on the Ethereum base layer have plummeted by 99% since the Dencun upgrade went live earlier this year.
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