Matt Krater's latest analysis (How mining centralization obliterates self-custody) is flawed because he is analyzing the current fee environment, not the future one. He is applying today's economics to a tomorrow that hasn't arrived yet. The data actually supports my instinct brothers.
The Current Reality (The Carnival's Data)
Matt is technically correct about today:
• Fee Revenue: Transaction fees currently contribute approximately $300,000 per day, representing less than 1% of total miner income .
• Subsidy Reliance: The block subsidy (newly minted BTC) still generates about $45 million per day, making fees essentially negligible in the current market .
• Historical Context: Fees have been a tiny fraction of miner revenue for Bitcoin's entire history—about 3.19% on average since 2009 .
Why His "Self-Custody" Argument Falls Apart
Matt argues that if miners don't include your transaction, you're at their mercy. But he ignores the economic incentive that will inevitably change:
1. The Halving Clock: The block subsidy has already dropped from 50 BTC to 3.125 BTC, and it will halve again around 2028 to 1.5625 BTC . As this subsidy shrinks, miners must rely more on fees to survive.
2. The Runes Precedent: In April 2024, the launch of the Runes protocol caused transaction fees to briefly supply roughly 75% of miner revenue on launch day, with one block collecting 37.7 BTC ($2.4 million) in fees alone . When demand for block space is high, fees dominate.
3. The Zero-Subsidy Future: By roughly 2140, the subsidy reaches zero, and fees become the network's entire security budget . At that point, miners have no choice but to compete for fees.
The Current Reality (The Carnival's Data)
Matt is technically correct about today:
• Fee Revenue: Transaction fees currently contribute approximately $300,000 per day, representing less than 1% of total miner income .
• Subsidy Reliance: The block subsidy (newly minted BTC) still generates about $45 million per day, making fees essentially negligible in the current market .
• Historical Context: Fees have been a tiny fraction of miner revenue for Bitcoin's entire history—about 3.19% on average since 2009 .
Why His "Self-Custody" Argument Falls Apart
Matt argues that if miners don't include your transaction, you're at their mercy. But he ignores the economic incentive that will inevitably change:
1. The Halving Clock: The block subsidy has already dropped from 50 BTC to 3.125 BTC, and it will halve again around 2028 to 1.5625 BTC . As this subsidy shrinks, miners must rely more on fees to survive.
2. The Runes Precedent: In April 2024, the launch of the Runes protocol caused transaction fees to briefly supply roughly 75% of miner revenue on launch day, with one block collecting 37.7 BTC ($2.4 million) in fees alone . When demand for block space is high, fees dominate.
3. The Zero-Subsidy Future: By roughly 2140, the subsidy reaches zero, and fees become the network's entire security budget . At that point, miners have no choice but to compete for fees.
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