Bitcoin and Ethereum Users Enjoy Low Transaction Fees: What’s Behind It?
Bitcoin and Ethereum users are currently benefiting from unusually low transaction fees. As of late June, the average Bitcoin fee dropped to $1.93, its lowest in eight months, while Ethereum fees fell to $0.70, down from highs of $2.50 earlier this year.
Vitali Dervoed, CEO and co-founder of the decentralized exchange Spark, explained, “The drop in Bitcoin transaction fees is largely due to reduced network congestion and a slowdown in mining activity following the recent halving event.” Dervoed, with a decade of experience in finance and DeFi, noted that such fee reductions are not uncommon after a halving.
“The halving often leads to a temporary drop in mining activity because miners adjust to lower profitability. This reduction in competition for block space can result in lower fees,” he added.
Justin d’Anethan, head of business development for APAC at crypto market maker Keyrock, also highlighted other contributing factors. “Recent spikes in transactions due to Ordinals and Runes inscriptions have cooled down, leading to lower fees,” he said.
Carlos Mercado, a data scientist at blockchain analytics firm Flipside Crypto, agreed, pointing out that the buzz around Ordinals has waned, which impacts transaction volumes and fees.
Potential Downside for Bitcoin Miners
While low fees benefit users, they pose challenges for miners. Mercado noted that “BTC fees were compensating for lost block rewards” until recently. He emphasized that for Bitcoin to stay secure, miners must cover their operational costs. With halving events reducing their rewards by half, miners rely on higher Bitcoin prices or increased transaction fees to make up for the loss.
Summary Review: While the current low transaction fees for Bitcoin and Ethereum provide relief for users, they highlight underlying issues. The drop in fees is attributed to reduced network congestion and decreased mining activity following recent halving events. Although this situation benefits users by lowering costs, it presents challenges for miners, who rely on transaction fees to offset reduced block rewards. The long-term security of Bitcoin and Ethereum networks may depend on higher prices or increased fees to ensure that miners can cover their operational costs.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
