Ethereum gas prices hit lowest level since 2020, highlighting Layer 2 network benefits

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24th June 2024 – (New York) The median daily gas price on Ethereum’s mainnet plummeted to its lowest level since 2020, highlighting the potential role of Layer 2 networks in alleviating the expenses associated with transactions on the world’s second-largest blockchain. On Saturday, the median gas price dropped below 3 gwei, a figure unseen since the previous year, indicating a notable reduction in costs for Ethereum users.

This decline is particularly striking when compared to gas prices just a year ago when the median price ranged between 15 and 20 gwei. March of 2024 witnessed the peak gas prices, with the highest median gas price recorded on 5th March, reaching 83 gwei, according to data from a Dune Analytics dashboard created by @hildobby.

However, following the implementation of the Dencun upgrade on Ethereum on 13th March, which introduced “blobs” and reduced transaction costs on Layer 2 networks, the median gas price has steadily decreased. As a result, Ethereum’s burn rate has reached a 12-month low, as reported by The Block. Currently, Ethereum maintains a slightly inflationary state, with a seven-day average supply growth of 0.56% per year, according to ultrasound.money.

In contrast, Bitcoin mining revenue per terahash per second (TH/s) has experienced record lows over the past two months, coinciding with the halving event. The Block’s data dashboard reveals that the reduced profitability may be attributed to a scarcity of new Bitcoin wallets entering the ecosystem, with the seven-day average of new Bitcoin wallets currently at its lowest level since 2018.

Despite these challenges, mining companies such as CleanSpark, Bitfarms, and Core Scientific have demonstrated resilience, outperforming Bitcoin’s price year-to-date, according to The Block’s data. Notably, CleanSpark has surpassed Bitcoin’s price performance thus far. Additionally, former U.S. President Donald Trump has expressed support for the Bitcoin mining industry during his meetings with representatives, should he secure victory in the upcoming Presidential election in November.