Coin meme is changing Bitcoin miners

Transaction fees account for an increasing share of the meme coin, NFT bloom that can cause Bitcoin miners to switch from mining to validating transactions.

In early 2023, the Bitcoin community started talking about a protocol called Ordinals. Created by software engineer Casey Rodarmor, Ordinals makes it possible for users to put text, photos, and videos inside each satoshi - the smallest unit of Bitcoin (there are 100 million satoshis in one Bitcoin). This is considered new on Bitcoin since 2009, but also increases the size of the block causing transaction fees to increase.

Outside a Bitcoin mining area in Russia. Photo: Bloomberg

Despite that, Ordinals is still heavily applied to the Bitcoin blockchain, paving the way for NFT and meme coins to flourish since the beginning of the year. Instead of minting on Ethereum's ERC-20 as in previous crazes, through Ordinals, the new meme coin is built on the BRC-20 standard. According to statistics from Galaxy Digital Holdings, about 25,000 meme coins on BRC-20 have been born since the beginning of March, while the Bitcoin NFT ecosystem has also grown strongly, expected to reach a value of $4.5 billion by 2020. 2025.

Bitcoin miners currently have two revenues, one from the reward for deciphering blocks in the blockchain, the other from the transaction fees. However, the NFT craze and meme coins on BRC-20 help miners increase their income from validating.

According to Glassnode , there are days in May when transaction fees account for more than 40% of miner revenue. This is a huge number, because in the past, 90% of the revenue of cryptocurrency farms was from decoding algorithms and receiving Bitcoin rewards - an activity called mining.

“The Ordinals protocol has provoked a seismic shift in the bleak Bitcoin mining landscape,” commented Jihan Wu, President of Singapore-based crypto mining company Bitdeer Technologies Group.

Experts estimate that the explosion of authentication in the Bitcoin blockchain can reduce the negative impact of cryptocurrency mining - an activity that has been criticized in the past for consuming energy and causing bad impacts on the environment. school. Over the past time, Bitcoin miners have also faced a double burden and are looking for new revenue sources.

On the other hand, however, it is suggested that Ordinals clog the network and interfere with Bitcoin's store of value and payment functions. Most recently, the Pepe coin meme fever is considered the reason why the world's largest cryptocurrency exchange Binance had to close Bitcoin withdrawal orders twice due to the large pending transaction volume on May 7 and May 8.

According to CryptoQuant data, from April, the average fee per transaction on Bitcoin's blockchain was at $2.8, but then reached $30 on May 8, then dropped to $6 on May 18. . Data compiled by Dune Analytics AS shows that the total cost of validation attributable to Ordinals is approximately $37.4 million.

Analyst Carlos Gonzalez Campo of cryptocurrency exchange 21Shares AG said that the BRC-20 does not bring much benefit in the blockchain space. According to him, protocols like Ordinals attract attention simply because they make some difference that has never been seen on the Bitcoin blockchain before.

Meanwhile, Messari analyst Sami Kassab believes that the meme coin craze on BRC-20 will quickly die down, but developers will apply it to other systems, such as using Bitcoin as a data layer. protect or store important documents that need to be preserved forever.

It is estimated that the last Bitcoin will be fully mined in the year 2140. After this time, all Bitcoin-related activities on the mining system revolve around validation. Bitcoin's network consists of thousands of computers called nodes. When a person makes a transaction, the nodes will validate and receive a token reward of a certain value depending on the block data size. Transaction fees were created to speed up Bitcoin transaction validation as well as eliminate junk transactions, thereby protecting and maintaining the integrity of the Bitcoin network.

"Ordinals is helping to revolutionize Bitcoin mining. It is completely rewriting the way people think about profit from this cryptocurrency," commented Colin Harper, head of research at Luxor Technologies.

Bao Lam (according to Bloomberg )

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