How "London" curtails the Revenue of Ethereum Miners

Until the "London Hard Fork", revenue of Ethereum miners used to be closely associated with the average gas price paid by Ethereum network users. Higher gas prices meant more income for miners. This relationship seems to have broken down as a result of the rule change adopted in early August 2021.

Below chart illustrates the effect "London" had on user fees and the variable part of miner revenue: 

• Transaction fees earned by miners (blue line) used to be closely linked to the gas price paid by users (gray dotted line).

• Following the “London Hard Fork”, that relationship is now weak at best.

• Instead, gas fees are now primarily associated with ether burn (orange line).

More gas demand for transactions cause users to pay higher fees as always, but now higher fees are mostly paid in the form for burned ether. Miners are not proportionally compensated for processing larger blocks with more transactions.

While total costs paid by users have been trending upward since August 2021, total rewards earned by miners (block rewards + uncle rewards + uncle inclusion awards + network transaction fees) have remained flat.

Total costs can exceed total rewards, meaning that usage fees measured in dollars must exceed the fair value of consumed resources to maintain the network by a considerable margin.