Ethereum Gas Fees and Bitcoin Mining Revenue Plummet to Multi-Year Lows
Ethereum's gas fees and Bitcoin miners' revenue both dropped to multi-year lows over the past weekend.
Ethereum Gas Fees and Bitcoin Mining Revenue Plummet to Multi-Year Lows
Ethereum transaction costs reach lowest in 4 years
According to data from Etherscan, the average gas price of Ethereum on June 23 plummeted to 3 gwei, the lowest level since 2020.
Average gas price of Ethereum from 2015 to present. Source: Etherscan (24/06/2024)
Ethereum gas fees on the network at 09:10 AM on June 24, 2024. Source: Etherscan
Just a year ago, this average gas price fluctuated around 15 to 20 gwei, peaking in the past 6 months at 83 gwei in March 2024.
The average transaction fee in USD on June 22 dropped to $1.3 - the lowest since mid-2020.
Average gas fees in USD of Ethereum from 2015 to present. Source: Etherscan (24/06/2024)
However, ever since the world's second-largest cryptocurrency network implemented Dencun upgrades in April to reduce transaction fees on layer-2 solutions, Ethereum gas costs have steadily declined to their current low levels. This partly reflects Dencun's impact in scaling Ethereum onto layer-2 solutions, aligning with the vision of co-founder Vitalik Buterin to alleviate congestion on the mainnet.
Meanwhile, Ethereum activities remain vibrant with key metrics such as daily transaction volume, active wallet addresses, and ERC-20 addresses showing no signs of significant decline.
Daily transaction volume on Ethereum. Source: Etherscan (24/06/2024)
Daily active addresses on Ethereum. Source: Etherscan (24/06/2024)
Despite the reduced transaction fees, the amount of ETH burned through the EIP-1559 mechanism has also declined. Statistics from The Block indicate that the ETH burn rate from transaction fees is at its lowest in the past 12 months. This suggests Ethereum is potentially experiencing a return to inflation, with an annualized supply growth rate of 0.56%, contrasting with previous deflationary periods sparked by surging transaction fees on Ethereum.
Daily ETH burned via EIP-1559 mechanism. Source: The Block (24/06/2024)
Bitcoin miners face revenue downturn post-halving
According to The Block, Bitcoin miners are also grappling with declining revenue since the halving event in April.
Revenue per TH/s computing power is showing signs of returning to May 2024 lows - the lowest recorded since 2027.
Bitcoin mining revenue per TH/s computing power in the past 12 months. Source: The Block (24/06/2024)
Another contributing factor is waning demand for Bitcoin network usage compared to earlier this year, with the number of newly created addresses in the past 7 days at lows reminiscent of the downtrend in 2018.
Average number of new addresses created on the Bitcoin network in 7 days. Source: The Block (24/06/2024)
Nevertheless, there are still promising signs such as the rising stock prices of major US-based mining companies like CleanSpark, Bitfarms, and Core Scientific, which have outperformed Bitcoin's price this year, partly due to commitments supporting the cryptocurrency mining sector from 2024 US Presidential candidate Donald Trump.
