Bitcoin Miners Struggle as Transaction Fees Hit 3-Year Low

Bitcoin miners are facing increased challenges as the share of transaction fees in their total earnings has hit a three-year low. Despite the price of Bitcoin trading above $100,000 per coin, the transaction fees that miners receive have fallen to less than 1% of their total block rewards, the lowest level since 2022. This decline indicates that the operations in the industry are earning less for their work, exacerbating the difficulties miners have faced throughout the year.

Bitcoin miners earn rewards by processing blocks of transaction data and adding them to the blockchain. For each block processed, miners receive 3.125 BTC, currently worth over $327,000, along with transaction fees. However, as fewer people use the Bitcoin network, transaction fees remain low, resulting in miners earning less for each successful block win. The average cost to make a Bitcoin transaction currently stands at $1.45, and transaction costs have typically remained low this year and last, only occasionally spiking due to increased network activity.

Miners, who often operate large-scale industrial facilities with specialized computers, were severely impacted earlier this year by the declining price of Bitcoin. In some cases, they were forced to sell more coins to keep their businesses running. While the recent rise in Bitcoin’s price offered some relief, blockchain data shows that blocks processed contain small amounts of transactions. This trend has been flagged as problematic by industry figures, including Square CEO Jack Dorsey, who advocates for broader use of Bitcoin for everyday payments rather than just as a store of value.

Bitcoin was recently trading at $104,648, after a nearly 4% drop over a 24-hour period. The coin has recovered substantially since dropping below $75,000 in April, a dip attributed to President Trump's tariff announcements. However, the rising price of the asset has not eased the concerns of miners. According to CJ Burnett, Compass Mining's chief revenue officer, "Despite Bitcoin's price gains, mining revenues have remained near all-time lows since the 2024 halving." The halving, a quadrennial event, reduces mining rewards by half. The last halving took place in April 2024, slashing rewards from 6.25 BTC.

Typically, the price of Bitcoin tends to soar one year to 18 months following the halving, though the coin is lagging compared to previous cycles. Miners have stated that BTC's price shouldn't be an issue if they’re running lean, efficient operations. Burnett added that miners could survive difficult times with "the most efficient mining hardware and competitive power costs." Mihir Bhangley, co-founder and partner at Sangha Renewables, emphasized that Bitcoin mining profitability hinges more on cost structure than Bitcoin's price. Investing in the best hardware ensures long-term, resilient returns for miners, regardless of market cycles.