Bitcoin Gas Fees Hit All-Time High, Signaling a Major Structural Shift in the 2025 Market

In May 2025, a historic paradox emerged in the Bitcoin network: the average transaction fee soared to $2.40, reaching a new high for the year, while the daily number of transactions fell by 35%.

This phenomenon overturns traditional understanding—usually, rising fees occur in sync with increased network activity. The market structure is undergoing profound changes, with institutional participant expansion and the upcoming supply shock becoming key driving factors.

The Triple Logic of High Fees, Whales Dominate the Market

Behind the surge in Bitcoin transaction fees is a fundamental shift in the structure of market participants. Institutions and “whales” have replaced retail investors as the main force in network activity, and they are willing to pay a premium to ensure priority confirmation of transactions.

From April to May 2025, Santiment data shows an addition of 76 “whale addresses” (each holding ≥ 1000 BTC). Companies like Metaplanet and Strategy have made large-scale purchases of Bitcoin and deposited them into cold wallets, freezing liquidity.

The supply of Bitcoin on the exchange has synchronously decreased from 25,000 coins in January to 21,000 coins in May, a decline of 16%. The increasing scarcity forms a positive feedback loop with institutional entry.

When Bitcoin price Standing at $105,000, investors regard the average cost of $2.40 as the “coffee cost” — a trivial price for trading certainty.

Halving Effect and Technological Evolution, Fees are the Lifeline of Miners

After the Bitcoin halving in 2024, the block reward will be reduced by another 50%, and the proportion of transaction fees in miners’ income will surge to 38%. This marks a transformation in the security model of the Bitcoin network: transaction fees have become a new pillar for miners to maintain their operations.

Network technology upgrades also affect the cost structure. The Lightning Network accounts for 43% of off-chain transactions, alleviating pressure on the mainnet. However, transactions that remain on the mainnet have seen increased costs due to intensified competition for block space.

The popularity of the Ordinals protocol and BRC-20 tokens has increased the block load, with complex operations (such as fund transfers and derivatives investments) accounting for 62%. While technological evolution has reduced some costs, it has also driven up the pricing of core on-chain activities.

Horizontal Comparison: The Fee Reduction Path of Ethereum

When Bitcoin fees rise, Ethereum shows the opposite trend. In the first quarter of 2025, Ethereum’s total transaction fees decreased by nearly 60%, reaching the lowest level since 2020.

This contrast is due to the successful layered strategy of Ethereum. The Dencun upgrade reduced Layer-2 transaction costs by 95%, with regular transfer fees dropping from $86 to $0.39.

Base processes over 80 transactions per second, leading the Layer-2 networks. Platforms like Arbitrum and zkSync have transaction costs even lower than $0.01.

The high fees of Bitcoin highlight its “digital gold” attribute, while Ethereum achieves the transformation of an “affordable settlement layer” through L2, reflecting different ecological positioning of the two paths.

The Difficult Balance of Mining: Cost Pressures Force Transformation

Miners are struggling to survive in the cracks between reward halving and fee fluctuations. In the first half of 2025, the cost of mining one Bitcoin will exceed $70,000, an increase of more than 34% year-on-year.

The unit hash rate income (hashprice) plummeted from 0.12 USD/TH to 0.049 USD/TH. Profit compression triggered a wave of mergers and acquisitions in the industry. Core Scientific may be acquired by AI cloud computing company CoreWeave, and after the news broke, the stock price surged 18.5% in a single day.
Mining companies are breaking through with a three-pronged strategy:

• Capital operation: Marathon, Riot, and CleanSpark raised over 3.7 billion USD
• Technology upgrade: New generation ASIC efficiency improved by 35%
• Energy transition: Hydropower, wind power, and natural gas surplus energy become the main power sources.

The more critical breakthrough is the coordinated layout with AI data centers, where mining farms simultaneously serve mining and AI computing tasks, improving resource utilization.

Future Outlook, L2 and Regulation Reshaping the Fee System

Bitcoin fee fluctuations signal deeper changes. Forbes predicts that by 2025, the Bitcoin DeFi ecosystem will achieve a locked value exceeding $24 billion through L2 networks. Bitcoin L2s based on ZK technology (such as Citrea or Alpen Labs) are expected to be implemented, achieving programmability while expanding capacity.

The regulatory environment is improving in sync. If Trump is elected, it may promote cryptocurrency-friendly policies, and the EU MiCA framework has been implemented. The appointment of the new SEC chairman will end “Operation Chokepoint 2.0,” allowing the U.S. to regain its status as a center for crypto innovation.

The fee structure will exhibit a layered characteristic:

• Mainnet: Institutional large-scale settlement, tolerant of high fees
• L2: Daily trading and DeFi, maintaining low costs
• Cross-chain: Asset bridging, medium fee range

The sources of miner income have diversified, shifting from pure block rewards to a combination of “block rewards + transaction fees + AI computing power services.” Crypto analysts point out that the era of high fees for Bitcoin will accelerate the adoption of layered networks. Teams like Starknet are developing Bitcoin L2 solutions based on ZK technology, and the testnets of Citrea and Alpen Labs have already processed their first transactions.

The proportion of transaction fees in miner income has reached 38%, indicating a fundamental transformation of the network security model. When the block reward reaches zero in 2140, transaction fees will become the only pillar for maintaining the Bitcoin network. The current high fee dilemma is merely an early rehearsal for the future norm.