Ethereum miners made record revenues in May, earning more than Bitcoin for the second time this year.
Monthly mining revenue for the Ethereum blockchain reached $2.35 billion in May, according to statistics from CoinMetrics, compared with $1.45 billion for Bitcoin. In February, Ethereum's mining revenues narrowly surpassed Bitcoin's, dropping from $1.37 billion to $1.36 billion. Otherwise, bitcoin mining tends to dominate in terms of gross revenues, but not always in terms of profitability.
The current mining situation between Ethereum and bitcoin
Proof-of-work mining requires people to dedicate their computing power to protecting the network. This is the process by which new transactions are processed on the network and new tokens are created.
Mining revenue is made up of two elements:
block rewards,
transaction fees.
Each time someone mines a transaction block and adds it to the blockchain, they receive a certain number of newly created tokens. In the case of bitcoin, this represents 6.25 BTC ($227,000) every 10 minutes; for Ethereum, it's two ETH ($5,100) every 13 seconds or so.
They also receive transaction fees within this block.
Ethereum's dominance in May
This is a by-product of the price of ETH itself, which hit a record high of $4,164 on 10 May, as well as high transaction fees on the crowded network. The busier the network – and it has become thanks to the rise of decentralised finance applications (DeFi) and NFTs – the tougher the competition to make a trade; fees adjust according to supply and demand.
Just over $1 billion of ETH miners' revenue last month came from fees, compared to $130 million for BTC. Ethereum's transaction fees have always exceeded Bitcoin's.
However, two imminent events are set to change the Ethereum mining landscape: the inclusion of EIP-1559 in a July network update known as the London hard fork, and the eventual move to a proof-of-stake consensus.
EIP-1559 is a proposed enhancement to Ethereum that will burn ETH transaction fees rather than give them to miners. By decreasing the amount of ETH in circulation, this could lead to an increase in demand for the asset, which would increase the value of US dollar block rewards.
Proof of participation, however, will end mining and replace it with 'staking'. Essentially, the network will be protected by the ETH filing process by individuals. They will claim new rewards if they correctly validate blocks of transactions, and lose part of their stake if they don't.
