Demand for the Ethereum blockchain has been rising at a rapid pace throughout the past several weeks and months, with the DeFi mania driving swathes of investors to decentralized exchanges like Uniswap to trade ERC-20 tokens.
One byproduct of this trend has been a massive spike in the cost of fees to transact on Ethereum, which have hit fresh all-time highs, far outpacing those seen during the 2017 and 2018 ICO mania.
This has made mining Ethereum highly profitable, with standard GPUs producing notable returns every month.
Ethereum Fees Hit Fresh Highs as Demand for Blockspace Surges
Investors have been flooding into decentralized exchanges at an unprecedented rate throughout the past few months, purchasing a vast array of DeFi-related tokens.
This has fueled massive gains amongst these coins, with many seeing parabolic returns of 1,000% or more over the past few weeks.
So-called “yield farmers” have also been heavily transacting on Ethereum to take advantage of highly lucrative returns on various pools across the ecosystem, which requires that users make multiple transactions to move tokens between pools.
This has driven ETH fees to the highest levels that they have ever been, which is reflected in the amount of ETH users are paying daily. This metric peaked at 35k ETH yesterday.
Daily fees spent by users have been climbing since the start of the year, but they only passed the 2018 highs in late-July when the DeFi craze began growing at an unprecedented pace.
This trend can be seen while looking towards the below chart from etherscan.io, which shows the parabolic rise that fees have seen in recent weeks.
Image Courtesy of Etherscan.io
ETH Miner Profitability Rockets Higher
“It is stupidly profitable to mine Ethereum right now. These numbers are using my GTX1070. And this calculator doesn’t account for transaction fees, which right now are 4x the block reward. So a standard GTX1070 makes, after residental power costs, profits around $90 per month.”
Image Courtesy of Lowstrife.
These massive fees have made it nearly impossible for yield farmers to be consistently profitable.
As such, there’s a strong possibility that demand for Ethereum blockspace will soon dive, driving down the profitability of mining.
Featured image from Unsplash.