Introduction

With the emergence of digital asset treasury companies and bitcoin’s price breaking all-time highs, people have been quick to forget the core value proposition of the Bitcoin network: a decentralized, censorship-resistant monetary system designed to provide permissionless access to global value transfer.

Since the late-2024 decline in non-monetary Runes and Ordinals activity, Bitcoin’s onchain usage has sharply diminished. We’re now seeing an increasing number of blocks that are “free” or nearly free, meaning the average fee paid is 1 satoshi (one hundred-millionth of a bitcoin) or less per virtual byte. (A virtual byte is the standard unit for measuring transaction size on Bitcoin.) This is a short-term benefit for users who want cheap, fast transfers. However, it adds strain to the economics of mining, which is already under pressure following the 2024 halving.

This note analyzes the structure of Bitcoin’s fee market to assess what’s really happening onchain and examine what it means for the network’s economic health. It also analyzes OP_RETURN transactions and their evolving usage. This is particularly relevant given the debate surrounding Bitcoin Core’s upcoming v30 release. This version of the network's open-source software would allow much larger and multiple OP_RETURN outputs per transaction by default. The planned changes have sparked criticism from parts of the Bitcoin community concerned about spam.

Key Takeaways

• Bitcoin fee pressure has collapsed.
  • Median daily fee has dropped >80% since April 2024.
  • As of August 2025, ~15% of daily blocks are “free blocks.”
• OP_RETURN activity surged and receded.
  • During peak Runes adoption (Q2-Q3 2024), OP_RETURN txs often accounted for 40-60% of daily txs.
  • As of August 2025, that share has declined to ~20%.
• Mempool activity is lacking.
  • The percent of not-full blocks has spiked to nearly 50% at times in the past few months.
  • A dormant mempool could pose long-term sustainability questions for miner revenue following the 2024 halving, which reduced block rewards to 3.125 BTC.
• Onchain activity may be getting displaced by alternatives.
  • Spot BTC ETFs now hold ~1.3 million BTC, much of which doesn’t really move onchain.
  • Trading and speculative activity are shifting to alternative L1s like Solana, especially for use cases such as memecoins and NFTs.
• Over 1.5 million BTC are still held in legacy P2PK addresses. These are bare public key addresses and are considered immediately vulnerable to potential quantum computer attacks because the public key is exposed onchain at all times.
• Over 6 million BTC are still held in legacy P2PKH addresses.
• P2WPKH now holds the largest share of unspent BTC out of any address format.

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