Despite Bitcoin's larger capitalisation, mining Ethereum requires a lower initial investment that pays off much earlier. And even Bitcoin's status as a "store of value" doesn't play into miners' hands.
Many have dubbed Bitcoin the digital gold, with analysts at many leading banking institutions (including Goldman Sachs and JP Morgan) writing about such a shift in preferences. The network is the most decentralised and secure, but it does not support smart contracts, and its speed (TPS) is limited to seven transactions per second.
As a result, the main income miners receive is the block reward, which currently stands at 6.25 BTC. The commission per transaction, meanwhile, remains below 1%.
With Ethereum, the situation is completely reversed, and the high demand for transactions is leading to significant increases in commission. The network is only slightly faster than Bitcoin and cannot process more than 20 TPS. This requires users to offer higher tips to miners to ensure that their transaction is added to the next block as quickly as possible. The average commission currently stands at $13, but on 4 May, it reached an unprecedented peak of $6,000.
This spike was sparked by the launch of Yuga Labs' new NFT collection in which each token provides access to a virtual plot of land in the new metaverse, Otherside. Demand exceeded all expectations, and buyers inflated miners' tips massively in a bid to secure one of the 55,000 tokens on offer. The collection sold out in three hours.
As a result of the hype surrounding the launch, miners were able to earn $231 million in a single day, which marked a new all-time high. The previous maximum of $117 million came in May 2021.
The news didn't go unnoticed by Elon Musk. On 4 May, the Tesla CEO changed his Twitter profile picture to a collage of Bored Apes from Yuga Labs' Bored Ape Yacht Club. What's more, he did so in breach of copyright since he hadn't bought the NFT and didn't have the rights to its use. The collage's author, Michael Bouhanna, asked him to either delete the image or purchase the rights from the rightsholder.
With the dawn of NFTs and DeFi, Ethereum has become more profitable not only for miners but also for hodlers. The ETH/BTC pair has maintained an uptrend for several years now, one that will continue thanks to the future expansion of virtual assets and the emergence of new metaverses.
StormGain analytical group
(cryptocurrency trading, exchange and storage platform)