Grayscale Says Ordinals Will Help Keep Miners Afloat

Updated: 12 February 2024

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The Bitcoin halving event in April will slash miner revenue in half, but fees from Ordinals activity will help keep Bitcoin miners afloat, Grayscale said.

In a recent report, Grayscale analysts said the reduction in revenue poses a challenge for miners after halving as they now derive most of their revenue from block rewards. As these rewards decline and mining difficulty increases, miners might struggle to sustain their activities, it said.

Miners are already selling off coins and raising fresh capital to bolster liquidity and sustain operations after the halving.

The good news is that Ordinals activity on the Bitcoin network opens up a new revenue stream for miners, it said. Miners derive over 20% of their revenue from Ordinals during peak network demand, it added.

“The advent of ordinal inscriptions has revitalized onchain activity, with over 59 million Non-Fungible-Token-like (NFT) collectibles inscribed, generating upwards of $200 million in transaction fees for miners as of February 2024,” Grayscale said. “This trend is expected to persist, bolstered by renewed developer interest and ongoing innovations on the Bitcoin blockchain.”

NEW REPORT: fundamental onchain activity and positive market structure updates could make the spring 2024 $BTC halving fundamentally different from the ones that came before. pic.twitter.com/SIjBg11cpV

— Grayscale (@Grayscale) February 9, 2024

Bitcoin’s Price Post-Halving

In the past, the halving event has coincided with massive price gains for Bitcoin. Grayscale analysts now say that these price gains are not solely driven by the halving event, and that coinciding macroeconomic factors also play a crucial role.

But the launch of spot Bitcoin ETFs (exchange-traded funds) will generate demand that will help support Bitcoin’s price and ease post-halving selling pressure, the report said.