Bitcoin TX Fees Rival Ethereum Amid Ordinals Resurgence: Glassnode

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Bitcoin TX Fees Rival Ethereum Amid Ordinals Resurgence: Glassnode
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The Bitcoin network collected transaction fees from its users on par with Ethereum last week as ordinals inscriptions returned to form, according to blockchain data.

The reversal bunks a years-long trend of Ethereum being the costlier network, and raises questions about both Bitcoin’s usability and long-term security.

The Cost of Inscriptions

According to IntoTheBlock, Bitcoin fees “surpassed Ethereum” last week, totalling $61 million between November 18 and November 25.

The market intelligence provider’s figure slightly outstrips that of Glassnode, whose data reflects ~$52.6 million in fees during the same period. Meanwhile, Ethereum’s fees on Glassnode tallied ~$61.5 million.

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These figures are far closer than normal. In November 2022, for example, Glassnode shows that Ethereum gathered $92.2 million in total fees, while Bitcoin generated just $12.5 million throughout the month.

The difference compared to last year lies with “ordinals,” a newly developed protocol for inscribing non-BTC tokens on the Bitcoin blockchain that was popularized earlier this year.

The technology supports both fungible tokens (ex. stablecoins) and non-fungible tokens (NFTs) on Bitcoin – two major features that once set Ethereum apart from its older sibling. As the popularity of both use cases soared back in May, so did Bitcoin’s transaction fees, exploding to $124 million across the month.

The pattern repeated itself in November: as ordinals blew past 40 million total inscriptions, the average BTC transaction fee soared to $12.96 in the week preceding November 13, while the average Ethereum transfer cost $7.52.

When ordinals volume was down two weeks prior, those figures were just $2.56 for Bitcoin and $4.94 for Ethereum.

Pros and Cons of High Fees

Minting ordinals NFTs can be especially costly because their image data is embedded directly into the Bitcoin blockchain, unlike Ethereum NFTs. This makes them take up lots of memory space in each Bitcoin block, leaving less room for standard, lower-fee transactions to be processed efficiently.

On the other hand, high fees create greater profits for Bitcoin miners, incentivizing them to keep securing the network.

According to Hashrate Index, over 12% of rewards to Bitcoin mining pool FoundryUSA this month have come solely from transaction fees, amounting to 0.77 BTC per block on average.

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