Ethereum miners are the biggest winners in DeFi, earning $168 million in September, surpassing Bitcoin miners

Ethereum (ETH) miner revenues soared in September, according to on-chain analytics resource glassnode. Although the price of ETH did not rise significantly during this period, miners on the Ethereum network saw an increase in revenues due to high fees.

Miners earned 450,089 ETH in fees ($168.7 million) in September, a 39% increase from the previous month, when miners earned about $113 million in fees.

During the same period, Bitcoin miners’ fee income pales in comparison to Ethereum’s and has actually declined. BTC miners earned $26 million in September, a 50% decrease from $39 million in August. According to cryptocurrency mining pool F2Pool, mining ETH is now three times more profitable than mining BTC.

The sharp increase in Ethereum miners’ revenue was due to DeFi activity peaking in September and leading to multiple increases in transaction fee prices.

DeFi is a great fit for yield farmers and miners

Not only has DeFi demonstrated a strong use case for Ethereum, but it has also generated new demand for Ethereum, which can be used to pay for transactions and smart contracts. All of these factors have pushed the price of ETH forward in 2020, allowing it to significantly outperform Bitcoin.

Additionally, a large amount of BTC has been flowing into the Ethereum blockchain in the form of WBTC and RenBTC, further increasing activity on Ethereum. To date, WBTC tokens alone are worth nearly $1 billion.

As Ethereum miners’ revenue grows, new participants join the network to reap the benefits. The network’s hashrate has also been growing steadily and broke through an all-time high on October 7, another fundamentally bullish signal for ETH as it shows that more participants are investing in the network.

Recent data also shows that new users have flocked to Ethereum. As the number of addresses holding ETH continues to rise, MetaMask, a popular Ethereum browser wallet widely used in DeFi, has reached 1 million active users this month, but can Ethereum handle the additional load on the network?

Will DeFi Make or Break Ethereum?

DeFi has created traction for Ethereum and helped bring a large number of miners back to the network, but it is also worth noting that fees have reached unsustainable levels for the network due to network congestion.

Because users are competing for transactions to be processed, they have to pay higher fees. According to Blockchair data, the average fee for a standard transaction on Ethereum was $15 on September 2.

While this is good for miners in the short term, it could put casual users off DeFi altogether as smart contracts become too expensive to use. In fact, this issue may have been one of the main reasons for the sharp pullback in DeFi token prices last month.

Despite the growing popularity of second-layer solutions, most people simply don’t use them. Other more permanent solutions, such as the upcoming Ethereum 2.0, appear far from ready, which could lead to competitors like Binance’s Smart Chain taking action or even overtaking Ethereum altogether.

Some analysts also believe that the DeFi "craze" may be over as DeFi's popularity declines and regulatory intervention is imminent.

Nevertheless, if Ethereum wants to gain an advantage in the development of new trends such as DeFi and NFTs, it must quickly solve its scalability problems.