Asia Morning Briefing: ETF-Driven Fee Compression Hits Bitcoin Miners Hard

Bitcoin’s Quiet Chain: ETFs Dominate Flow as Miner Revenues Shrink

Despite trading near all-time highs, Bitcoin’s onchain activity is notably subdued — a divergence that’s raising concerns about the network’s long-term sustainability, particularly for miners.

According to data from Glassnode, transaction fees on the Bitcoin blockchain have plummeted back toward decade-long lows, even as BTC flirts with the $100,000 mark. In previous bull runs, fee spikes closely tracked rising prices, signaling high demand for blockspace. This time, the pattern is absent.

A recent report by Galaxy Research highlights the trend: median daily fees have dropped more than 80% since April 2024. Today, nearly 15% of daily blocks are confirmed at just 1 satoshi per vbyte, and close to half of all blocks aren’t even full — signs of a thin mempool and waning onchain demand.

What’s changed? The rise of spot Bitcoin ETFs and custodial platforms is a major factor. These institutions now hold more than 1.3 million BTC, and coins held in such vehicles rarely move onchain, reducing the need for transactions. At the same time, retail activity — once a major driver of congestion — has shifted to faster, cheaper networks like Solana, which now dominates in areas like NFTs and memecoins.

This structural change means Bitcoin’s price is increasingly set by flows into custodial products, rather than by organic demand on the blockchain itself.

That poses a challenge for miners. Following the most recent halving, block rewards have dropped to 3.125 BTC, and with fees contributing less than 1% of mining revenue as of July, profitability is under severe pressure. As a result, many publicly traded miners are expanding into AI infrastructure and high-performance computing (HPC) to diversify their income.

Bitcoin’s price may be booming — but the chain’s activity, and the miners who secure it, are facing an uncertain road ahead.