How Rising Bitcoin Fees May Have Prevented Post-Halving Death Spiral

Bitcoin price has grown over 40% since the asset’s halving this past May. The market braced for the miner “death spiral” caused by the sudden doubling of the cost of producing each BTC, but it never arrived.

Now data is showing that rising Bitcoin fees might have been responsible, at least in part, for avoiding the miner death spiral from the cryptocurrency’s previous halving.

BTC Mining Blockchain Backbone Healthier Than Ever

To ensure that Bitcoin required no third-party or intermediary to validate transactions and keep the network secure, Satoshi Nakamoto developed the proof-of-work consensus algorithm that powers the first-ever cryptocurrency.

To keep miners interested and pouring energy into powering the network, and incentive mechanism was designed, that unlocks more BTC with each block generation.

The cryptocurrency’s built-in deflationary mechanism further reduces this supply roughly every four years. At the start of 2020, each block confirmed earned miners a reward of 12.5 BTC.

Related Reading | Economist: Early Days of Bitcoin Uptrend Are Here, Breakout Has A Long Way To Go

As of May 11, 2020, that reward instantly became just 6.25 BTC. From that moment on, Bitcoin has risen by over 40% and still climbing. Crypto analysts basing their theories on past halving cycles expected the increase in price as supply was reduced, but not before a miner induced “death spiral” took place.

This death spiral was expected to cause widespread capitulation in the weakest miners, forcing them to sell off their holdings to fund future mining operations. But here we are, some three months later, and this death spiral never arrived – but why? Rising fees may be the answer.

bitcoin miner fees

Bitcoin Narrowly Escapes Death Spiral Thanks To Rising Transaction Fees

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