Bitcoin on-chain activity has fallen into the red after the infamous LUNA collapse. The collapse had no doubt reduced faith in the cryptocurrency market and has seen investors significantly reduce their activity in the space. This has led to losses across the board for miners as fee revenues, transaction volumes, and transaction values have all plummeted, all of which have seen daily miner revenues fall towards yearly lows.
Bitcoin On-Chain Activity Declines
The previous week had seen on-chain activity ramp up during the height of the LUNA collapse. Mostly, this had been to investors scrambling to move their coins to avoid being affected by the downtrend that followed. As well as exchanges needing to restructure their bitcoin wallets following the carnage which had seen activity rise.
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Due to this, there had been a significant jump in the transaction volumes as well as the average transaction. Although this did not translate to more revenue for miners, recording a 21.85% fall from the prior week. Miner revenues were even worse last week following the LUNA crash. It recorded an additional 7.95% loss that brought daily revenues to $25.5 million. The last time revenues were this low had been in July of 2021.
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With the market settling from the crash and the exchange wallet restructurings done, on-chain activity has now returned to normal levels. What this resulted in has been a 44% collapse from the previous week and daily transaction volume is down almost 50% from last week’s levels.
Mining Difficulty Back Up
The bitcoin mining difficulty had been going down for the last couple of weeks, which had seen the block production rate surpass the 6 blocks per hour goal about three weeks ago. What followed was a correction in the mining difficulty that brought the mining difficulty back up. The adjustment has seen block production fall well below the target to be sitting at 5.64 blocks per hour.
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The percentage of revenue made up by fees had also dropped 0.69% from the prior week to 1.81%. This was expected seeing that the fees per day had recorded a 33.48% decline in the same time period. Transactions per day were also down 6.185 to 252,532 daily transactions.
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Bitcoin’s price had also taken a huge hit that had contributed to the decline in daily miner revenues, alongside the decreased block production rate which is now at an all-time high. An adjustment is expected on Wednesday that will likely reduce mining difficulty by 4% and 5%. With this, the block production rate is expected to increase and if the price of the digital asset does mirror this move, then miners may see a significant jump in revenues this week.
Featured image from Seeking Alpha, charts from Arcane Research and TradingView.com
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