The recently launched NFT protocol Ordinals caused transaction fees on the Bitcoin network to increase 2.5 times and tripled profits of BTC miners.
The Ordinals protocol, which allows NFT storage on Bitcoin, was launched on January 21. A couple of weeks later, the network’s average commission increased by 122%. According to on-chain analytics, Bitcoin’s average transaction fee amounted to 0.000075 BTC ($1.7) on February 7, though it was $0.767 on January 29.
Moreover, profitability of BTC mining grew as well. On January 29, Bitcoin miners earned about 0.83 BTC (~$18,800) from transaction fees. And on February 7, this figure rose threefold to 2,442 BTC (~$55,300).
Interestingly, BTC’s quotes also rose immediately after the launch of Ordinals. According to Coingecko, Bitcoin gained 11% on January 21 and reached over $23,000. Afterwards, BTC was only growing, rising to over $24,000 on February 2.
A study by FSInsight showed that the launch of Ordinals caused an increased demand for BTC, which led to higher quotations of the first cryptocurrency. Analysts also noted that the protocol caused a rise in the average size of a Bitcoin block, which was reflected in the growth of transaction fees on the network.
Ordinals is a technology that inscribes “digital artifacts” into the Bitcoin blockchain. They’re partially analogous to NFTs and can contain various data: audio, video, text, or any images. The size of such “inscriptions” affects the growth of the network’s commissions. The more popular Ordinals will become, the more intranet activity will grow and consequently earnings of BTC miners. That’s where analysts see the value of the new protocol — an opportunity to change the future of Bitcoin mining thanks to the increasing number of apps on the network and their users.
Looking back, the profitability of BTC mining dropped by 20% in late 2022 and big mining companies were forced to sell everything they managed to mine during the year.
