Data from SimilarWeb shows that Ethereum mining revenue hit $1.37 billion in February for the first time in history.
This is nearly 65% more than the previous $829,56 million earned by ETH miners in the previous month.
Of the total revenue, transaction fees accounted for almost 53%, nearly $723 million. The remaining 47%, or $644.4 million, came in the form of block subsidies.
Mining activity has also seen a 16% increase, as the ETH network’s hash rate continued to grow. At press time, this indicator sees almost 420,000 gigahashes per second (GH/s), according to Etherscan.
Mining difficulty has followed suit, successfully surpassing the previous all-time high (ATH) of above 4,600 terahashes per second (TH/s) in early February. Now it is still climbing higher, heading to 5,400 TH/s.
ETH Mining Revenue has Grown
As of January 2021, network fees represented only around 28% of the whole revenue. According to BitInfoCharts, during that time, average Ethereum transaction fees jumped from $12 on Feb. 1 to an unprecedented $38 on Feb. 23, a 217% surge.
In this context, growth in fee revenue isn’t surprising. The growing transaction fees may have forced miners to sell ether in order to get more profit.
However, on Feb. 28, gas fees fell back below $12, probably following Vitalik Buterin’s Ethereum Improvement Proposal (EIP) 3298 announcement. According to Buterin’s post on GitHub, the proposal aims to remove gas refunds tied to the “SELFDESTRUCT” function in the London upgrade. Thus, the demand for gas tokens would become much lower.
Gas fees keep plummeting after the EIP-3298 was first disclosed on Feb. 26. Currently, one ERC20 transfer on Ethereum costs an average of $7.25, per transaction, according to Etherscan.
EIP-1559 Proposal to Lessen ETH Mining Revenue?
Other ETH improvement developments include Ethereum Improvement Proposal (EIP) 1559, which seeks to reduce miners’ transactional revenues. First released in 2018, it has become the most anticipated ETH 2.0 upgrade in light of surging gas prices.
The upgrade implies the massive burning of ETH fees as profits to ETH holders instead of miners. The proposal would entail that the network’s gas fees won’t be as highly volatile as they were during the past month. As a result, miners would lose out on their transaction costs, which is one of their key revenue sources.
Views on the EIP-1559 proposal vary as to whether the upgrade would help Ethereum evolve.
For example, F2Pool, which is now the third-largest Ethereum pool with about 11% of the network’s hash rate. They have supported the proposal saying it is a critical improvement for the whole ETH ecosystem.
On the contrary, Sparkpool, the largest mining pool with roughly 24% of the hash rate, has opposed the proposal, terming potential “wealth redistribution” as a robbery.
Time will tell how the EIP-1559 proposal will impact ETH miners. The upgrade is scheduled to launch in July along with Ethereum’s London hard fork.
Ethereum prices have slightly recovered as gas fees began to fall, showing the importance of transaction fees to all parties involved.
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