The miners of Ethereum made record revenue in the past month, making them earn more than BTC miners for the second time in a year.
The monthly revenue from mining on the ETH Blockchain totalled $2.35 billion in May based on the data from Coin Metrics, in comparison to the $1.35 billion made from BTC mining. In February also, the revenue from ETH mining passed that of BTC narrowly with $1.37 billion compared to BTC’s $1.36 billion. If not, BTC mining seemingly dominates in gross revenue but doesn’t always in profitability.
The proof-of-work (PoW) mining requires that people dedicate their computer power to helping in securing the network. This is a process through which fresh transactions on the network are processed, and new tokens are created.
The revenue from mining consists of two elements, namely transaction fees and block rewards. Each time a block of transactions is mined and added to the blockchain, the miners get a set of a number of the freshly created tokens. In the case of Bitcoin, the reward is 6.25 BTC which is about $227,000 every 10 minutes and 2 ETH valued at $5,100 every 13 seconds thereabout. Within that block, they also receive the transaction fees generated.
The dominance of Ethereum in May is a derivative of the price of the digital asset that hit a new all-time high of $4,164 on the 10th of May, as well as the increased transaction fees due to the network congestion. The busier the network becomes (which is becoming busier because of the shoot in the NFTs and DeFi (Decentralized Finance) applications), the more the competition between transactions which causes an increase in the fees.
Simply put, the transaction fees adjust based on the line of demand and supply. More than $1 billion of the total revenue from ETH mining comes from the fees compared to the $130 million that BTC generated. However, the transactions fees of ETH have been consistently ousting BTC’s.
Two events will affect the landscape of the Ethereum network soon, and those are the integration of the EIP-1559 in the network upgrade in July and the final move to PoS – Proof-of-Stake – consensus.
The EIP-1559 is an improvement proposal by Ethereum to burn transaction fees instead of giving them to the coin miners. A reduction in the total ETH in circulation will increase the demand and increase the block reward value in USD.
Proo of Stake, on the other hand, will shut mining down altogether and replaced it with staking. The network will essentially be secured via the process of users depositing Ether. Fresh rewards will be claimed when blocks of transactions are validated, while a portion of their stake will be lost if they failed to.
With this, the miners should not always get used to hitting a record revenue in the crypto space.