Ethereum has so far put up a tremendous run in 2021. Its price has hit multiple all-time highs this year, cementing it as one of the best digital assets to be invested in for the year. Major upgrades to the network like the London hard fork have seen the project move towards a deflationary mechanism, creating scarcity in the asset by burning one-third of the fees issued on the network.
The ETH mining industry also felt the heat when the Chinese government had begun its crackdown on crypto mining in the middle of the year. Like bitcoin, its mining revenue had been affected by the crackdown. However, ETH did not suffer as much as bitcoin did from this move. Hence, miners of the asset have seen good returns on their activity. The difference has been evident in the mining revenue between bitcoin and ethereum miners.
Ethereum Outpaces Bitcoin Mining
Mining revenues between Ethereum and bitcoin mining show a discrepancy in their figures. For one, Ethereum miners have definitely had the more profitable year out of the two. Although not a very wide gap, it is still a notable difference in the returns from both assets. While ETH miners saw a total of $17 billion in revenue from their mining activities, bitcoin miners only saw $13.6 billion.
Volatility between the two assets has also played into how the figures have turned out. Bitcoin mining is associated with high volatility. Yet, ETH has it beat as the asset with the most volatility. ETH mining volatility sat at a staggering 47% compared to bitcoin’s 28%. This volatility in daily revenues plays a big role in the revenue figures for ETH miners.
ETH outpaces BTC mining metrics | Source: Arcane Research
The average daily revenue for BTC mining is $45 million. For ETH, this figure is $56 million. In metrics like average fee percentage of daily revenue and revenue correlation with fees, ETH also recorded higher figures.
ETH price trading above $4,500 | Source: ETHUSD on TradingView.com
ETH Fees Go UP
Since Ethereum miners’ revenues are largely dependent on fees, the rate of sending transactions on the network greatly affects the mining revenue. As such, ETH’s volatile fee nature can play a positive or negative role in the revenue returns of miners. When fees go up, so do the revenue returns for miners go up, and vice versa. Furthermore, ETH miners usually have a short window where they can collect the revenues, represented by the 0.55% fee correlation shown above.
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This correlation has played in the favor of ETH miners this year. The growing popularity and adoption of decentralized finance and NFTs have seen fees skyrocket on the network. Being largely dependent on fee revenue, miners have benefitted the most from this spike. Despite the fee burn, rewards for miners on the blockchain are up for the year.
ETH mining revenue from fees sits at 53% | Source: Arcane Research
Compared to Ethereum, transaction fees on the bitcoin network have remained mostly low since the bull rally ended in April. ETH miner revenues were made up of 53% of fees for the year. Meanwhile, transaction fees only contributed 1% to the total miner revenue for bitcoin.
Featured image from Crypto News Flash, chart from TradingView.com