How Bitcoin Miners Are Making More Money

Bitcoin mining has generally been a profitable business, provided that the bottom has not just fallen out of the Bitcoin market like during crypto winter. However, it generally takes a big investment for an operation to work on a grand scale to see the best profits. The profitability of Bitcoin mining appears to be changing. How Bitcoin miners are making more money has to do with the frenzy for meme coins and NFTs. New profits are coming due to the new Ordinals software and the ability of miners to charge lofty fees for NFT and meme coin transactions.

What Are Ordinals?

Ordinal has always referred to numbering things in sequence. The new ordinals software has to do with a way to permanently store data on the Bitcoin blockchain. Data is added to an individual Satoshi, the basic unit of Bitcoin (0.00000001 BTC). Part of the ordinals system is called ordinal theory and is the numbering of every single Satoshi in existence of which there are trillions (a single Bitcoin has 100 million Satoshi units).

Each Satoshi in this system is not numbered by simply starting at one and adding one for the next. Rather the numbering system takes into account block height number and how many Satoshi are in a block, inherent Satoshi value and grading by rarity, a percentage based on Bitcoin supply position, and ordinal number coding using alphabetical characters a to z.

What this system does is greatly expand the amount of information that can be associated with each Satoshi and make Bitcoin more usable for video gaming and other on-chain applications. It can be expected that new uses will be found for this approach whether or not these end up being profitable for Bitcoin miners.

Where Is the Profit for Bitcoin Miners?

It is the Bitcoin miner who sets this system up, numbering each Satoshi, and then charging a fee for the service. Current estimates are that forty percent of miner profits are now coming from ordinals. The current meme coin mania and increased interest in NFTs is helping drive miner profits. The downside of all this, according to detractors, is that the increase in data being stored in the blockchain essentially clogs up the system making it harder for those who simply are using Bitcoin to buy, sell, invest, and trade.

How Long Will Ordinals Profit Last?

Eventually there will no more mining of Bitcoin. The system has a fixed total which will be reached in a little less than 20 years. At that point fees for transactions will be the only source of Bitcoin miner income. Part of the issue will be how long interest in NFTs and meme coins lasts at the current level. Another will be new and not-yet-foreseen uses of this system to store data on the Bitcoin blockchain. In the meantime, the ordinals system coupled with an increased interest in NFTs and meme coins has provided a welcome boost to Bitcoin miner’s profit margins!

Yes, Ordinals Can Be Traded!

Of course, once there is a new crypto entity, there are speculators who will buy and sell in search of profits. These entities can be traded aside from Bitcoin itself. A warning to novices is that this market is much more thinly traded than NFTs, meme coins, or the general crypto system. As such the usual technical indicators used for trading Bitcoin as well as stocks, futures, options, and the likely are going to be of little use. That leaves a trader with making their best guess and hoping that prices move favorably for their trades! Let the trader of these new crypto entities beware!