- Bitcoin Ordinals NFTs dominated at press time, accounting for a majority of transaction activity on the Bitcoin network.
- Declining miner revenue and increased miner difficulty posed challenges and may impact BTC’s price.
Since the inception of Bitcoin [BTC] Inscriptions and subsequent Ordinals NFTs, the sector has seen a lot of growth. Bitcoin Ordinals have bumped up to second place, outpacing most competition in terms of NFT volume. This increase in dominance raised questions about its impact on the broader Bitcoin sector.
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Source: Stocktwits NFT
Bitcoin Ordinals dominate
According to Dune Analytics, there were 10 million brc-20 inscriptions at press time, accounting for over 1% of all Bitcoin transactions. The rising popularity of these NFTs showcases the growing interest in digital collectibles and unique blockchain-based assets.
Source: Dune Analytics
Despite the dominance of Ordinal transactions on Bitcoin, the volume of Ordinal transactions occurring on marketplaces had declined significantly.
This decline may indicate a shift in user behavior, where NFT trading activity is shifting to other platforms or projects outside the traditional marketplaces. It raised the need to explore the reasons behind this shift and analyze the evolving dynamics of the NFT market.
Source: Dune Analytics
Additionally, miner revenue declined significantly, according to Glassnode’s data. Notably, the total daily production cost amounted to $18.3 million, while miner revenue reached $24.9 million. This yielded an estimated net profit of $6.6 million.
The declining miner revenue suggested the need for miners to adapt to changing market conditions and optimize their mining strategies.
Source: Dune Analytics
When will miners see green?
Additionally, miner difficulty has grown as well. Growing miner difficulty negatively impacts miners by making mining more challenging and resource-intensive.
As the miner difficulty rises, miners need to invest in more powerful and efficient mining hardware to compete effectively. This results in higher operational costs for miners as they need to upgrade their equipment and invest more in electricity consumption.
The high difficulty also reduces the probability of miners successfully mining new blocks, leading to a decrease in the frequency of block rewards they receive.
If miner revenue continues to decline, miners would be forced to sell their holdings. This will impact BTC’s price negatively in the long run. The selling pressure from miners could lead to a downward price movement, affecting market sentiment and potentially triggering further selling by other market participants.
Source: Blockchain.com
Read Bitcoin’s [BTC] Price Prediction 2023-2024
At press time, BTC was trading at $30,082. Its price had seen an uptick over the last week, which could be attributed to interest shown by funds such as BlackRock.
However, with the price surge, the MVRV ratio of Bitcoin also spiked. This suggested that most addresses holding Bitcoin were profitable. The profitability of Bitcoin holdings may majorly influence the decision-making of holders in the future.
Source: Santiment
