With $2.35 billion in mining revenue in May, Ethereum surpassed Bitcoin.

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Transaction fees generated over $1 billion in Ethereum mining income.

Ethereum miners earned a record amount in May, surpassing Bitcoin miners for only the second time in the previous year.

Monthly mining revenue on the Ethereum blockchain reached $2.35 billion in May, according to statistics from Coin Metrics, compared to $1.45 billion for Bitcoin. In February, Ethereum mining revenue narrowly pipped Bitcoin, $1.37 billion to $1.36 billion. Otherwise, Bitcoin mining tends to dominate for gross revenue, if not always profitability.

Proof-of-work mining requires individuals to devote their processing power to assisting in the network’s security. It is the process through which new transactions on the network are processed and new tokens are produced.

Mining revenue is made up of two parts: block rewards and transaction fees. When someone mines a block of transactions and adds it to the blockchain, they are rewarded with a certain amount of freshly minted tokens. In the case of Bitcoin, that’s 6.25 BTC ($227,000) every 10 minutes; in the case of Ethereum, it’s two ETH ($5,100) every 13 seconds or so.

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They also get the transaction fees for that block.

The price of ETH, which reached a record high of $4,164 on May 10, as well as hefty transaction fees on the congested network, contributed to Ethereum’s supremacy in May. The busier the network grows—and it has grown extremely busy as a result of the surge in decentralised finance (DeFi) apps and NFTs—the more competitive it becomes to complete a transaction; fees vary in accordance with supply and demand. Fees accounted for little more than $1 billion of ETH miners’ earnings last month, compared to $130 million for BTC. Ethereum’s transaction costs routinely outnumber those of Bitcoin.

Two looming events are set to alter Ethereum’s mining landscape, however: the inclusion of EIP-1559 in a July network upgrade known as the “London hard fork” and the eventual move to proof-of-stake consensus.

EIP-1559 is an Ethereum improvement proposal that will burn ETH transaction fees instead than giving them to miners. By reducing the number of ETH in circulation, the change may increase demand for the asset, raising the value of block rewards in US dollars.

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Proof of stake, on the other hand, will end mining and replace it with “staking.” The network will essentially be safeguarded by the process of users depositing ETH. They’ll get new incentives if they successfully validate blocks of transactions, but they’ll lose some of their stake if they don’t.

Therefore, Ethereum miners should not become too accustomed to the record earnings.

 

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