Bitcoin Ordinals: Fees Drop as Network Faces Pressure
The latest data as of August 22 reveals a 24% drop in total daily fees generated from Bitcoin Ordinals on the leading network, plummeting from around $95,000 to $72,000.
Dune Analytics data highlights that the average daily fees from Bitcoin Ordinals stood at $71,709 on August 21, down from $94,910 on August 14. This decline comes after a period of consolidation, during which Bitcoin Ordinals activity remained steady alongside horizontal movement in BTC prices throughout early August.
The slump in Bitcoin prices appears to have a direct effect on Ordinals minting. Over 26 million inscriptions were minted by August 22, generating more than $50 million in fees for Bitcoin miners.
The Ordinals protocol allows users to attach various items, including text and images, to the smallest BTC unit (Satoshis), integrating them into transaction blocks. Miners verify these blocks and earn fees, a process crucial for network security in Bitcoin’s PoW consensus system.
Miners play a critical role in maintaining the safety of inscribed items. To ensure security and incentivize miners, full blocks are essential. Despite criticism for potential fee hikes and block size issues, Bitcoin Ordinals contribute to block saturation, boosting miners’ fee earnings. On-chain data highlights that most inscribed items are text-based, with lighter items incurring lower fees.
However, users inscribing larger items face higher costs, leading to faster block filling and increased transaction fees for prompt inclusion.
Bitcoin currently faces downward pressure, and the future of Ordinals activity and NFT minting on the network remains uncertain, aligning with historical trends where declining asset prices impact on-chain activities and sectors like DeFi and NFTs.