Bitcoin transaction fees are in free fall. This report explains why

Bitcoin trading fees, even if the price sits close to the highest levels of all time, fell to historical low levels and created an unusual situation that challenged traditional wisdom.

Written from Galaxy Digital Research A comprehensive report By analyzing this, by examining everything from the rise of hidemen to the results of quantum information processing for different Bitcoin address types. To discuss the findings, Bitcoin Season 2 discussed what it means to the Author Chamber and what it means for miners who struggled with the economy and users who enjoyed the temporary cheap transactions.

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Below is a transcript of the speech between hosts Charlie Spears and Colin Harper and Galaxy Digital’s Will Owens.

Charlie: Bitcoin had a small decline from 124k to 113k, but this time it was different in the chain. How important is it to look at the trading fees right now?

Colin: It is strange that Bitcoin is tear at the highest levels of all time and that the transaction fees are very low. We saw that the latest transaction fees adapted to paraboolic movements in Bitcoin. You bought it a little in 2021, but it wasn’t that crazy. Bitcoin is a kind of wild that we have empty blocks or empty blocks at $ 120,000.

In the longer term, you want to make sure that miners have income outside the block subsidization, because it will eventually be zero. I don’t think this is a big problem right now. Some miners are definitely struggling, margins are thin, but those who have cheap enough power will be the stomach. The network is always set.

I need to play your package, Will, we need to play again. We need Ordinals Degens and inscription men to pump a spam for miners to receive payments.

Charlie: Why did you write this report?

Will: I was trying to think about what is the best thing to be analyzed in Bitcoin right now. I was sitting in Mempool. Actually, I thought how many blocks were there?

One of my favorite graphics in the report is this percentage of free blocks. This is something that does not exist in 2024 because the wage market was last year. When I saw this, I decided to dive. Everyone is talking about Bitcoin, apparently everyone buys Bitcoin, but nobody actually uses the chain.

Charlie: Can you explain the difference between media and average trading fees in your graphics?

Will: There will always be contradictory procedures where people make more payment. You can see how much people pay for wages. So I overcome the median and average, I feel like a better way to visualize. Especially during Ordinals and Runes, there were people who wanted to pay super -high fees to make sure that their transactions have passed quickly. When the armies fell, there was literally a block of blocks. I think it was a crazy thing like an average fee of $ 200.

Charlie: What exactly is the “free block”?

Will: It’s not actually free. I have described as blocks where the average wage ratio is less or equal than a SAT per VBYTE. This did not happen in 2024. Now we are increasingly starting to see that more blocks are actually free blocks. It’s about whether you’re a miner. We see that many of these miners have returned to HPC -type things for more consistent income flows.

As the block subsidy reduces each half, miners hope that the processing fees will become a larger part of the cake. Not just. I’m not trying to be alarmist, I analyze the data as I see.

Charlie: Do Colin notice even miners what low trading fees are?

Colin: Oh, they are definitely aware. If the trading fees were located in the third quarter of 2024 with the ordinals and inscriptions, they would have gained 15% to 20% more than the trading fees. The price of hash is really wavy, $ 35 per day, the lowest level of all time. Many mines have attempted due to electrical costs.

This is more interested in a longer time. If we are still at this point after the next half or 5 years after the next half, then I will start to worry more. It also depends on the price of Bitcoin. If Bitcoin’s price value quickly enough, the subsidies will still be very valuable and what the transaction fees do will not really be important.

Finally, I think Bitcoin mining will approach the edge space where electricity is produced. The huge industrial scale mines that we are used to will take a different form.

Charlie: Let’s talk about Op_return. Can you explain your transaction composition graph?

Will: Black, we have non -op_return transactions, absolutely money transactions. Blue we have operations with OP_return outputs.

This can be very different things. Runes procedures are considered this. Recently, we see more people using OP_return to fix the data in Blockchain.

It is not easy to find this data for normal user. In fact, you should go to a block explorer and examine it yourself.

I really love the graph of all time on it, the graph of all time.

Source: Galaxy Digital

You can see it with the launch of Runes, which is a big increase in blue before.

I have to look at this honestly about the spike in 2019. I saw him and I just looked at the runs. As a general rule, if you don’t know what’s happening in the chain, China is doing something crazy nine times out of ten people.

Charlie: Tell me about Galaxy Digital’s Op_return Press bulletin.

Will: Everyone in the crypto is aware that a Bitcoin whale from Satoshi is selling 80,000 Bitcoin. We announced this in a press release in Galaxy, then we thought it makes sense to announce it in Bitcoin Blockchain. You can see that the real picture is included in Op_return in Mempool. It cost a total of $ 94 to publish this press release. There are too many circulation. I think it makes sense that Bitcoin companies will publish such important things in Bitcoin.

Charlie: Do you follow the relief of OP_return standards on Bitcoin Core version 28?

Will: As far as I understand, Bitcoin Core removes the long -standing 80 byte boundaries for OP_return data in transaction relay policies. Nodes can accept data up to 4 megabyte in op_return fields.

An important distinction: Miners or node operators do not need to transfer these operations. The election was left to them. We always have this discourse about spam concerns on Twitter, but perhaps it is actually useful because we need wages to return. We want to increase activity in the chain in Bitcoin.

Will: Mempool.space made a really good report on this issue in May. We always hear something about the effects of Quantum Computing on Bitcoin. Different script types have different quantum effects. This early old script type contains full pubkeys directly outputs. If a strong enough quantum computer can obtain special switches from public switches, these outputs will immediately be vulnerable. This is 1.5 million Bitcoin.

Paydess-to-Pubkey-Hash has recently passed the others with bitcoins. Taproot is the newest type of script in terms of bitcoin quantity, but not too small in terms of addresses.

Charlie: Why are certain types of address types more vulnerable to quantum calculation?

Will: Everything is about the description of the public switch in the chain. For Taproot Address Types, Pubkey is safe until the address is spent. If Bitcoins are not exhausted, Pubkey is safe. In fact, we will later put forward a longer quantum report about Bitcoin inferences, and we will make super dive.

Charlie: This brings us to “Paper Bitcoin Summer ,, do users actually carry Bitcoins to the hidemen outside the chain?

Colin: An average user will not dominate itself. The learning curve is very upright. These custody use is growing much faster. If you are using a vector, there is no reason to pay in the chain.

More trade has been moved to financial products such as ETFs. All Bitcoin treasury companies are kept between 2 or 3 custody. Coinbase has more than a million Bitcoin. When there are operations there, there is no reason for it to happen in the chain. Just the hands that change paper. I think this was inevitable.

Will: There are no utxo levels when buying and selling ETF. This clearly reduces transaction fees. In addition, more and more speculative activity, such as Solana faster and faster chains. If someone wants to enter the crypto to trade mememeko, there is no real reason for them to trade in Bitcoin right now. UX is not good enough compared to alternatives. All these denges left the Bitcoin ecosystem.

Charlie: Are there last thoughts?

Will: It will be interesting to see how it develops. Perhaps we will start to see that Bitcoin has more speculative activities. Obviously everyone is watching Bitcoin price action, but in terms of transaction fees, it doesn’t look too big at the moment. I will keep everyone up to date. I have all the data, so I will refresh it every day.

One last thing for users is a really good time to reinforce UTXOs. It’s very cheap right now. A kind of temporary gift, like cheap and fast transactions.