Conversely, fractal Bitcoin could end up slashing mining revenues.
Fractal Bitcoin (FBTC), a sidechain scaling solution for Bitcoin (BTC), has the potential to either boost or reduce mining revenues.
FBTC is merge-mined with Bitcoin, allowing miners to simultaneously mine both cryptocurrencies with the same hardware. This could provide an additional revenue stream for Bitcoin miners, especially in the competitive post-halving environment.
However, Fractal Bitcoin also supports the BRC-20 token standard and aims to be a faster and cheaper scaling solution for the Bitcoin base layer. This could reduce network fees generated by demand for non-fungible tokens on the Bitcoin network, ultimately decreasing miner profits.
Despite the initial surge in tokenized assets on the Bitcoin network, such as Bitcoin Runes and ordinals, which drove up miner revenues, these fees have since collapsed.
If Fractal Bitcoin and other Bitcoin layer-2 solutions gain traction, it could lead to a scenario similar to the layer-1 revenue collapse observed on the Ethereum network.
Following the launch of the Dencun upgrade, which drastically lowered fees for layer-2 transactions on Ethereum, fees on the network’s layer-1 have plummeted.
This spurred a massive shift towards layer-2 networks, as traders sought to avoid the high gas prices on the base layer. As a result, layer-1 revenues on Ethereum have collapsed.
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