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So What If Bitcoin Miner's Fee Revenue Is Low? – Bitcoin Magazine

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Much discussion has centered around the implications of decreasing fee revenue for bitcoin miners — why is it happening and what does it mean?
Revenue for bitcoin miners from transaction fees is dropping to record lows, and fierce debates over the importance and long-term effects of this data are raging online. Current fee revenue represents barely 1% of total earnings for miners, a significant drop from the height of the latest bullish market cycle when, in February 2021 for example, fees were over 13% of monthly revenue. This data has been the subject of intense disagreement on Twitter as everyone from decentralized finance researchers to Bloomberg journalists to professional cryptocurrency traders weigh in on the doom (or lack thereof) signaled for bitcoin by low fee revenue.
This article provides an overview of the latest data on bitcoin fee revenue and answers the question of whether it matters in the short or long term that fee revenue as a percentage of total earnings is low and dropping.
Even though the latest batch of heated debates about the significance of fee revenue have only appeared in the past few weeks, transaction fee revenue for miners has been relatively low for several consecutive months. The line chart below visualizes network fees as a percentage of monthly mining revenue. From early summer 2020 to spring 2021, fee revenue sustained a strong upward growth trajectory. Things quickly changed last summer though around the time China banned bitcoin mining. Fee revenue has yet to recover.
Current fee revenue levels are not unprecedented though. The above chart shows similar levels on a percentage basis throughout the bear market of 2018 and 2019.
And miners aren’t necessarily complaining. Every month since August 2021, their total monthly revenue has surpassed $1 billion, and April 2022 shows no signs of bucking that trend. The bar chart below shows total monthly revenue (subsidies and fees) paid to miners each month for the past five years. Fee revenue is represented in orange on top of each bar, and sizable fluctuations in the dollar amount of fees paid to miners are obvious.
But miners are still making money for securing the network and processing transactions. Sure, mining is getting more competitive as large and small miners alike continue adding more hash rate to the network. However, aggregate mining revenue is still substantial, thanks to the Bitcoin protocol’s mining subsidy, contributing to the already large stashes of coins plenty of miners have stockpiled.
The first and most obvious question to ask about bitcoin fee revenue is: Why is it low?
For context, fees represent one of a two-part reward system for miners servicing the Bitcoin network. Fee revenue varies based on network usage, so when fewer people use Bitcoin, miners earn less fee revenue. The other part of mining payouts is the block subsidy, a fixed amount of bitcoin paid every block which is famously halved roughly every four years. Eventually (meaning, a couple centuries from now), the subsidy will drop to essentially zero, which leaves transaction fees as the only source of revenue for miners who secure Bitcoin.
Looking a couple hundred years into the future, the obvious potential problem is if the subsidy is gone and fee revenue is still low, miners don’t get paid and a key part of Bitcoin’s security incentives evaporates. This specific incentive is typically called Bitcoin’s security budget, which represents the total amount of money the network pays miners. Put differently, the security budget is how much every Bitcoin user, in aggregate, pays for mining as a basic service to keep the network running and secure from attacks.
The line chart below visualizes some of the fee revenue data contextualized with daily transaction levels on Bitcoin. The precipitous drop in fee revenue is obvious, and at the same time, transaction levels are flat, at best, following a noticeable dip throughout most of 2021.
The simplest answer, therefore, to the question about why fees are low is because Bitcoin is being used less than it was before. So, why is Bitcoin used less? This question is harder to answer. Reasons for lower present use of Bitcoin range from increased Layer 2 use (e.g., Lightning Network or Liquid) to general boredom as price volatility continues dropping.
In the short term, effects of low fee revenue mostly consist of sporadic Twitter drama as critics try to extrapolate today’s fee levels into predictions about Bitcoin’s sustainability decades and centuries from now.
Bitcoin is currently in the middle of only its fourth halving period with a subsidy payout of 6.25 BTC per block. The subsidy will still be above 1 BTC for two more halving periods and above 0.1 BTC for at least 20 more years. Even though regularly monitoring network health is important, alarmism over the current state of fee revenue is premature.
All the available fee data represents an unhelpfully small amount, when considering the future lifespan of the Bitcoin network. Fee revenue is also highly volatile, which makes fee revenue predictions even harder to accurately calculate. At the height of the latest bull market, fee revenue represented roughly 15% of total monthly mining revenue. Today, that level has dropped to barely 1%. Will those large fluctuations continue? No one knows for sure.
In short, current fee revenue gives no reason for panic, but ignoring this important data is also unjustified.
The simplest and historically most reliable reason for fee revenue to rebound is another red-hot bullish market. But at a deeper level, the only way fees increase is if demand for Bitcoin block spaces also increases. Fees go up when people want to use Bitcoin. Options for cultivating this demand range from simply expanding adoption and daily use of bitcoin for payments to more controversial and complex efforts like building a decentralized finance ecosystem on the Bitcoin blockchain.
And it’s okay for future fee revenue to be an open question — for now. Nearly all of the doom and gloom broadcasted on social media about low Bitcoin fees is poorly substantiated given the small data set of historical fee revenue available to analysts and the sheer amount of time until the mining subsidy drops so low as to become irrelevant, making fees the only source of mining revenue.
If nothing else, Bitcoin has proven itself to be a reliant piece of technology. For the past decade, fee revenue has gone up and down. What fees will be 100 years from now is, quite simply, a wide-open question.
This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Trader Who Nailed 2022 Bitcoin Collapse Predicts Big Correction for XRP, Updates Outlook on Two Low-Cap Alt… – The Daily Hodl

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The crypto analyst who accurately predicted Bitcoin’s (BTC) crash this year says XRP is likely due for an over 50% decline.
The psuedonymous analyst known in the industry as Capo tells his 541,600 Twitter followers that open-source digital currency XRP remains in a downtrend despite its recent rally.
According to a chart shared by Capo, XRP appears poised to plunge to its high timeframe support at $0.20.
“XRP.”
At time of writing, XRP is changing hands for $0.447, an over 5% decrease on the day. The sixth-largest crypto asset by market cap has risen nearly 40% from its 30-day low of $0.32 but remains more than 86% down from its all-time high of $3.40.
Another altcoin on the trader’s radar is Stellar Lumens (XLM), a crypto asset designed to act as a bridge between two fiat currencies when sending money abroad. According to Capo, XLM gearing up for a quick rally to his target of $0.16 before resuming its downtrend.
“Long on XLM.”
At time of writing, XLM is valued at $0.118, flat on the day.
The analyst is also keeping a close watch on Reserve Rights Token (RSR), cryptocurrency designed to facilitate the stability of the asset-backed stablecoin known as the Reserve Token (RSV). According to Capo, RSR still offers more upside potential despite its over 90% rally in just two weeks.
“Support to resistance flip of the previous key level. Next target is $0.012, but main target remains $0.017. I haven’t taken profits yet, just trailing the stop in profits.” 
At time of writing, RSR is swapping hands for $0.0099, a 4.95% increase on the day.
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Bitcoin slips lower, and South Korea issues arrest warrant for Terra's Do Kwon – CNBC

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Bitcoin slips lower, and South Korea issues arrest warrant for Terra’s Do Kwon  CNBC
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Latest Stock Market News for Sept. 27, 2022 – The New York Times

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Concerns about rising interest rates and the prospects of a global slowdown remain.
Follow our latest coverage of business, markets and economy.
Isabella Simonetti and
Sept. 30
3,600
3,620
3,640
3,660
Data delayed at least 15 minutes
Source: FactSet
By: Ella Koeze
Unease on Wall Street continued on Tuesday, bringing the stock market to its longest losing streak since February 2020, even as trading in global markets started to calm after days of turmoil in everything from currencies to oil prices.
Trading was volatile. After an early gain, the S&P 500 changed course and ended 0.2 percent lower for the day, its sixth consecutive daily decline and a new low for the year. The last time the S&P 500 recorded a drop for that many days was in February 2020, when investors were shaken at the beginning of the coronavirus pandemic.
The S&P 500 has dropped 6.5 percent over the past six trading days. Market sentiment has turned sharply since a summer rally lifted the index some 17 percent from a June low, as investors have faced up to the idea that central banks around the world won’t slow down their campaign to raise interest rates to combat inflation, even if that threatens the economy.
The hard line from central bankers, who are trying to control the price increases that are running at their fastest pace in decades, has analysts predicting that a recession is more likely for the United States, Britain and continental Europe.
“It’s looking very clear now that the major central banks are not going to blink in bringing down inflation at the cost of growth,” said Rob Subbaraman, head of global macro research at Nomura. “I’m more worried about Europe than the U.S. in terms of the depth of the recession.”
Several central banks, including the Federal Reserve and the Bank of England, raised rates last week, with more increases in store.
On Tuesday, Charles Evans, the president of the Federal Reserve Bank of Chicago, said in a speech that “we will need to raise rates further and then to hold that stance for a while” to tame inflation.
Stock trading in Europe and Asia was steadier than in recent days, but some major benchmarks still ended slightly lower. The pan-European Stoxx 600 index fell 0.13 percent, while in Asia, Japan’s Nikkei climbed 0.5 percent and South Korea’s Kospi composite index gained 0.1 percent.
The Shanghai composite index rose more than 1 percent. Reuters reported that Chinese market regulators had asked brokers to help stabilize domestic stock markets ahead of an important Communist Party congress next month.
In Britain, the center of financial turmoil in recent days, the FTSE 100 dropped about half a percent, while the British pound climbed to $1.072, a day after touching a low point against the dollar. Investors there have been rattled by the government’s announcement on Friday of a sweeping plan to cut taxes and increase borrowing.
Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said on Monday that the severe market reaction to the British government’s proposals reflected a fear that the “new actions will add uncertainty to the economy.”
In the United States, “the key question will be, what does this mean for ultimately weakening the European economy, which is an important consideration for how the U.S. economy is going to perform,” Mr. Bostic said in an interview at a Washington Post event.
When asked whether the instability emanating from Britain increased the chance of a global recession, Mr. Bostic said, “I think it doesn’t help it.”
Oil prices regained some lost ground on Tuesday, with the price of West Texas Intermediate crude, the U.S. benchmark, rising 2.3 percent, to about $78.50 a barrel. The gains came as some oil producers in the Gulf of Mexico, including Chevron and BP, said they would evacuate some staff from oil platforms as Hurricane Ian made its way toward Florida.
On Friday, oil prices had dropped below $80 a barrel for the first time since January.
Jeanna Smialek and Joe Rennison contributed reporting.

The new British government’s plan for tax cuts, borrowing and spending will be met with a “significant” response by monetary policy officials, Huw Pill, the chief economist of the Bank of England, said on Tuesday. That could pit the central bank’s effort to reduce inflation by cooling demand against the government’s desire to stimulate the economy.
At the end of last week, Kwasi Kwarteng, the chancellor of the Exchequer, spooked financial markets when, without citing an independent fiscal and economic assessment, he revealed plans for the biggest tax cuts in half a century and an increase in government borrowing. On Monday, the pound dropped to a record low against the U.S. dollar, and analysts began to predict it would soon reach parity, or a one-to-one exchange rate. British borrowing costs shot higher as bond yields jumped to the highest levels in more than a decade, disrupting the mortgage market as traders bet the central bank would have to raise interest rates aggressively to tame inflation.
In a statement on Monday, the Bank of England appeared to rule out any interest rate increases before its next meeting in early November. Mr. Pill indicated that when the time came for a move it would be “significant,” a word he used often.
“We have all seen the recent significant fiscal news in the past few days,” Mr. Pill said on Tuesday at a conference hosted by Barclays and the Center for Economic Policy Research in London. “That has had significant market consequences as well as significant implications for the macro outlook.”
“It’s hard not to draw the conclusion that all this will require a significant monetary policy response,” he added.
The government’s policies, which include capping energy costs for businesses and households, “will act as a stimulus to demand in the economy,” Mr. Pill added, offering some of the first glimpses into how the bank will assess the recently announced measures.
One criticism of the government’s policies is that they pull in the opposite direction to the central bank’s goal of bringing down inflation, which is near a 40-year high. Last week, the cental bank raised interest rates by half a percentage point, disappointing some who thought that the move would be larger. The next day, the chancellor’s announcement on tax cuts and other measures shocked markets. Since then, traders have added to bets on interest rates to rise even more.
The criticism was echoed by the International Monetary Fund, which on Tuesday said that the government’s “large and untargeted fiscal packages” were undercutting monetary policy. The moves, it added, could also hurt low-income earners.
“The nature of the U.K. measures will likely increase inequality,” the I.M.F. said in a statement.
Mr. Pill also described the changes in British financial assets as significant. He said that these changes were part of a shift in asset prices in response to higher interest rates around the world, but that there was “very clearly a U.K.-specific element.”
Policymakers at the central bank “are certainly not indifferent to the re-pricing of financial assets we have seen,” Mr. Pill said.
Because Britain is a small, open market economy, higher bond yields and a weaker currency have an “important influence” on the cost of financing and price of imports, he said.
On Tuesday, the pound was trading below $1.08, up from its recent lows but still at levels unseen since the mid-1980s. Yields on benchmark 10-year bonds were at 4.51 percent, the highest since the financial crisis of 2008.
In all, the market moves have made the bank’s job of bringing down inflation harder, Mr. Pill said. Inflation is about five times the bank’s 2 percent target, even after seven interest rate increases since late 2021.
“Recent market developments have created their own additional challenges for the pursuit of our target,” Mr. Pill said.

Federal Reserve officials confront a world of rapid inflation, slowing growth and rampant uncertainty coming from turmoil abroad. In spite of all that, they are still predicting that they might be able to cool down the U.S. economy without tipping it into a painful recession.
Economists and markets are dubious, and even central bankers acknowledge that there are risks. But here are some of the reasons they have laid out for why they might be able to pull it off:
America has a strong job market. U.S. employers are still hiring at a solid clip, and the unemployment rate is near a 50-year low. “This gives us some room to maneuver to try to take care of the inflation problem as soon as we can, while the labor market is still strong,” James Bullard, president of the Federal Reserve Bank of St. Louis, said at an event in London on Tuesday.
Job openings are plentiful. Some economists think that the strong job market could provide a cushion, specifically because so many jobs are going unfilled right now. That might mean that job openings could fall as the economy slows — but without unemployment rising as sharply as it has historically amid declining demand. Jerome H. Powell, the Fed chair, called that possibility “plausible” at his news conference last week.
Inflation expectations are stable. Consumers’ longer-term inflation expectations have moderated recently. That's good news, because when consumers and businesses anticipate fast inflation, they can act in ways that make it more likely, such as asking for rapid pay increases or instituting regular price changes. The continued stability gives officials hope that price increases will not be as difficult to stamp out as they were in the 1980s, for instance.
Still, the risks are real. Several Fed officials have pointed to the turmoil abroad — the war in Ukraine, lockdowns in China and uncertainty in Britain — as a threat that could draw the United States into recession. It is also hard to guess how today’s rapid rate increases will play out over time, because their full effect takes a while to show up. And supply chains, while improving, could always become tangled again.
The Fed’s approach offers “a path for employment stabilizing at something that still is not a recession,” Charles Evans, the president of the Federal Reserve Bank of Chicago, said on Tuesday during an interview on CNBC Europe. “But there could be shocks.”

The surging dollar is wrecking stock portfolios, clobbering commodity prices and sinking rival currencies. The British pound has been among the most volatile currencies against the dollar, tumbling 5.6 percent over the past seven days, and briefly hitting a record low on Monday of $1.0327.
But one asset has been relatively calm over the past week: Bitcoin. The cryptocurrency has risen 6.5 percent over the past seven days, a surprisingly strong run that has caught the eye of crypto bulls and bears.
“You know we’ve reached a unique time in history when #Bitcoin suddenly is less volatile than fiat currencies,” tweeted Sven Henrich, the founder of NorthmanTrader, a markets research firm. Mr. Henrich was one of the most prominent bears during the recent bull market, warning about overpriced assets like crypto.
When central banks raised interest rates, Bitcoin largely traded like risky assets, such as tech stocks. But that hasn’t necessarily been the case over the past month. Bitcoin has traded in the green (but only slightly) so far in September, while the tech-heavy Nasdaq is down nearly 10 percent over that period.
But zoom out further, and the picture looks more frightening for crypto bulls. Bitcoin has lost more than half its value in 2022, far underperforming stocks, bonds and most currencies.
The Federal Reserve’s determination to crush inflation in the United States by raising interest rates is inflicting profound pain in other countries. Those increases are pumping the value of the dollar — the go-to currency for much of the world’s trade and transactions — and causing economic turmoil in both rich and poor nations, writes Patricia Cohen of The New York Times.
On Monday, the British pound touched a record low against the dollar as investors balked at a government tax cut and spending plan.
And China, which tightly controls its currency, fixed the renminbi at its lowest level in two years while taking steps to manage its decline.
The dollar is the world’s reserve currency — the one that multinational corporations and financial institutions most often use to price goods and settle accounts. Roughly 40 percent of the world’s transactions are done in dollars, whether the United States is involved or not, according to a study done by the International Monetary Fund.
And now, the value of the dollar compared with other major currencies like the Japanese yen has reached a decades-long high. The euro, used by 19 nations across Europe, reached 1-to-1 parity with the dollar in June for the first time since 2002.
In an anxious world, the dollar has traditionally been a symbol of stability. The worse things get — like during a pandemic or war, or amid climate disasters — the more people buy in dollars. And however cloudy the economic outlook is in the United States, it’s still better than in most regions.
Rising interest rates make the dollar all the more alluring to investors by ensuring a better return. That means they are investing less in emerging markets, further straining those economies.
The unusual concatenation of events is making things even worse for countries that might otherwise be able to take advantage of a devalued currency to export more of their own goods, which have become cheaper.

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