Miners in the Bitcoin network are facing challenges as the block subsidy, which makes up a significant portion of their revenue, is getting halved every four years. This reduction in revenue per block can be mitigated by increasing market share through equipment upgrades or acquisitions. However, some miners with higher energy costs may become non-profitable and shut down. Miners are also seeking partnerships to optimize their energy costs and manage their liquidity efficiently.
Transaction activity on the Bitcoin network has seen some growth, especially with the approval of spot Bitcoin ETFs, leading to increased transaction volumes. However, transaction fees still account for only a small portion of miner revenues, highlighting the continued dependence on the block subsidy. Bitcoin’s limited scalability and functionality compared to other blockchains, such as Ethereum and Solana, have hindered its ability to drive continuous revenues.
To ensure sustainability and profitability, Bitcoin miners need new use cases to emerge. Technological developments within the Bitcoin ecosystem, such as the introduction of fungible and non-fungible tokens through protocols like Runes and Ordinals inscriptions, have led to increased transaction fees. These innovations may allow Bitcoin to catch up with other blockchains and support tokenization efforts in financial markets. Additionally, layer-2 chains could mitigate Bitcoin’s scalability limitations and introduce functionalities for decentralized finance (defi) and tokenization. It is crucial for these nascent use cases to gain traction before the next halving to have a lasting impact.
In the long term, Bitcoin is expected to become a new global reserve asset and a credible means of exchange within a network of AI-powered economic agents. However, to sustain the network in the meantime, higher and more stable transaction revenues are essential, making the progress of concrete technological developments critical for miners.