• The article discusses Bitcoin’s growing miner extractable value (MEV) and how it is impacted by the use of data storage features like Segregated Witness (SegWit) and Taproot.
• It talks about the recent controversy surrounding JPEG transactions on the Bitcoin blockchain, as well as the ongoing NFT mini-craze.
• The article also revisits MEV conversations in context of non-Bitcoin networks like Ethereum, and considers what a sustained on-chain craze could mean for Bitcoin’s MEV.
Introduction
This is an opinion editorial by Zack Voell, a bitcoin mining and markets researcher, discussing miner extractable value (MEV) on Bitcoin. The article revisits this conversation in context of the latest controversy related to JPEG transactions on the Bitcoin blockchain.
Background On Bitcoin MEV
The Bitcoin network today is not a total MEV wasteland — but it is still very early. Robert Miller, product lead at FlashBots, said on a live stream about MEV that “there’s more MEV on Bitcoin than Bitcoiners like to acknowledge” and “some MEV in Bitcoin that just isn’t really being exercised by miners right now”. Lisa Neigut, a Lightning Network engineer at Blockstream has broadened the conversation with her article about Lightning Network MEV which explores opportunities for searchers and miners from Lightning Network use, as well as how searchers may impact on-chain transactions for Lightning Network channels.
Unpacking The Bitcoin NFT Craze
Bitcoin historians know that on-chain collectibles and art originated back in December 2012 when Meni Rosenfeld published “Overview Of Colored Coins”. Since then, node operators have been stuffing images such as GIFs into blocks through data storage features introduced by SegWit in 2017 and Taproot in 2021—resulting in one famous block/transaction mined by Luxor Technologies amidst an NFT mini-craze centered around Ordinals project. This practice has sparked disagreement between members of the community; however, it has also resurfaced conversations of growing importance relating to miner extractable value (MEV) which can be seen across non-Bitcoin networks such as Ethereum.
Impact Of NFTs On MEVs
A robust decentralized finance ecosystem built upon Bitcoin could quickly change current discussions surrounding MEVs; meanwhile a sustained on-chain craze of NFT activity could prove highly influential too—as demonstrated by one particular instance where a searcher paid $7 million to buy every Cryptopunk NFT at their floor prices. All this points towards an exciting future opportunity for miners to capitalize off of these new technologies in order to maximize profits from their mining operations.
Conclusion
In conclusion, there are both advantages and drawbacks associated with inscribing memes onto blocks within the bitcoin network—but this issue has shed light onto important conversations regarding miner extractable values across different types of networks such as Ethereum or even lightning networks too. It remains to be seen what ultimate impacts this will have upon bitcoin mining operations moving forward; however if current trends continue then they may prove highly lucrative indeed!