After remaining above 205 EH/s in April, the Bitcoin hash rate hit all-time highs around 230 EH/s this week. The creation of more Lightning channels could cause a drop in miner fees, allowing for an increase in profits.

Revenues from Bitcoin (BTC) mining fell in April compared to March, an ongoing trend over the last few months. However, that has not been a pretext for a drop in the participation of miners in the network.

Bitcoin mining firm Compass Mining reported that the profits from the activity fell by 4.5% in April compared to the previous month. That includes the reward of 6.25 BTC per mined block, plus transaction fees of around 1%. Those incomes went from USD 1,210 million in March to USD 1,160 million in April, calculated in US dollars.

Mining revenues closely relate to the price of Bitcoin, a currency that struggled between USD 38,000 and USD 42,000 throughout April. That situation could have helped explain the decline in profits during that month.

Data from BitInfroCharts indicate the Bitcoin hash rate, or transaction processing power on the network, remained above 205 EH/s. It rallied from that level and hit all-time highs of 230 EH/s this week, showing there are many operators online.

Bitcoin miners continue to operate, participating in the network and guaranteeing its security, despite earning less for their investment. Although it is notable, there have been reports on that trend for several months now.

A Factor Could Be the Growth of Channels on the Lightning Network

The growth of channels in Lightning may lead to a drop in on-chain transactions. That means fewer blocks with transactions for miners to process beyond those generated by the protocol. That would lead to a loss on transaction fees, which allows increasing the profits from mining.

Over the last month, there was an average of 80 thousand open-payment channels on the Lightning network. The figure does not reveal the massive use of the layer but clearly shows the incentive for more participation.

Data from blockchain analytics firm Glassnode indicates the number of Lightning Network channels remained above 80,500 throughout April. Although it led to a slight drop of 2% compared to March, it is more than the figures registered in previous months. That shows a greater integration of technology in various services.

Those Lightning payment channels also have a capacity of 3,721 BTC, equivalent to about USD 148 million, according to 1ML. That is the amount blocked between channels to generate liquidity in the Bitcoin micropayment network, allowing permanent movement.

That reveals that it is increasingly necessary to use the Lightning Network as a payment mechanism. Far from damaging the Bitcoin ecosystem, that technology makes it possible to accelerate transactions, decongest the network, and promote balanced mining.

How the Lightning Network Works and Why Bitcoin Needs It

The micropayment solution Lightning Network allows streamlined peer-to-peer transactions almost instantly. Transactions occur between channels in that layer, and their details go to the chain when they close.

That solution emerged as a faster and cheaper network for the exchange of Bitcoin. It solves the scalability problems of the main chain, where miners process the blocks with transactions. They later confirm those operations and take them to the network ledger.

That confirmation process usually takes about 10 minutes, such as the protocol pre-establishes. That leaves a fee for each transaction, considering the total income from mining.

By Alexander Salazar


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