On Sunday, bitcoin block 788695 registered higher transaction fees than miner’s rewards — a very rare moment in the cryptocurrency’s history — thanks to congestion caused by a surge in bitcoin ordinals (NFTs).
The transaction fees for block 788695 were 6.71 BTC — surpassing the amount of bitcoin minted in the block, worth 6.25 BTC.
For comparison, average transaction fees near past bitcoin bull market peaks were around 2.905 bitcoin.
Transaction fees exceeding miner’s rewards has only happened a handful of times in bitcoin’s history. In 2017, block 500546 experienced the same event, as miners struggled to compete for block space.
Surging bitcoin ordinals cause a ruckus
The unexpectedly high costs in fees have risen due to new bitcoin protocol BRC-20, which allows users to ‘permanently’ inscribe data on single satoshis. This feature has created a new kind of non-fungible token (NFT) marketplace, where predominantly text and JPEGs are placed on the blockchain and sold as what’s called bitcoin ordinals.
These days, it’s not uncommon to see one block upload over 3,000 inscriptions. According to Dune analytics, more than 476,000 images have been uploaded on the bitcoin blockchain so far, with miners raking in more than 482 bitcoin in fees for the inscriptions alone. Meanwhile, traditional Ethereum NFTs are crashing.
To miners, bitcoin ordinals are a sight for sore eyes. A gruesome bear market evaporated profits and destroyed livelihoods, but many rigs have switched back on during the solid price pump experienced this year. However, the bitcoin ordinals rush has created an immense backlog of transactions, which critics say have made the bitcoin network inefficient.
“There are 400,000 pending transactions on the bitcoin network and Binance halted transactions due to the congestion and high fees,” an NFT influencer tweeted on Sunday. “This community is supposed to be strong enough to handle quantum attacks, but watching it be defenceless to jpegs is embarrassing.”
Update 09:07 UTC, May 9: Clarified miner’s rewards in second paragraph.