On April 20, during the Bitcoin halving event, total transaction fees paid to miners surged to 1,257.71 BTC, reaching the highest level since December 2017. This spike in fees was a stark contrast to the previous day, where fees stood at only 116.94 BTC. With reduced block rewards post-halving, over 75% of miner revenue came from transaction fees.
The high transaction fees had significant implications for the usability of the Bitcoin blockchain. Over the halving weekend, the average transaction fee was $130, with a median fee of $93, making regular financial transactions on the network prohibitively expensive for most users. Only high-value transactions were feasible, as the fees became a minor part of the total transaction value.
The congestion and high fees caused by increased demand for block space during the halving had a notable impact on the Bitcoin network. While miners benefited financially, experiencing a revenue spike, the network itself suffered non-monetary damage. The practicality of using Bitcoin for daily payments and transfers was compromised, leading to a decline in active addresses on the network.
On the eve of the halving, active addresses dropped to 506,862, the lowest in nearly three years. Although there was a slight recovery to 674,613 active addresses on April 21, the numbers fell again to 530,371 by April 22. This suggests that the network may take time to return to its average yearly activity.
The decrease in active addresses indicates a potential loss of confidence among smaller investors and everyday users. The introduction of new protocols like Runes, while innovative, need to be carefully managed to prevent overwhelming the existing infrastructure during critical events like a halving.
Overall, the surge in Bitcoin fees had a significant impact on network functionality and user engagement, leading to a decline in active addresses and highlighting the need for careful management of new protocols in the cryptocurrency space.
