3 Ways Bitcoin Mining Pools Benefit from Ordinals

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After many years finally, there is a structured method to use Bitcoin block space for data other than Txs. It is important to look into it from miners’ point of view and what it may mean to them.

I will skip explaining the basics of ordinals, their rarity, and how inscriptions are integrated into them and leave that to you to read about it. Casey Rodarmor’s blogs seem to be a good resource.

Does Ordinals benefit miners by increasing Tx fees?


Yes; ordinals create a base demand for block space and heat the competition up for transaction fees.

In the long run that will benefit miners and will result in higher average TX fees.

In the past few months, there has not been much of demand for the Bitcoin block space which caused partially empty blocks to become very frequent. The current ordinals hype has addressed that matter and it has also slightly pushed average Tx fees higher ( from under 2% to about 2.5% of block reward). Also, the block size and average number of transactions in each block have gone up which does not translate to more income for Bitcoin miners, unfortunately.

How could this benefit miners in the future?


As the network evolves, the demand for bitcoin block-space goes up; so, does the competition. Halvings will boost that and the network will evolve to become more Tx fee dependent rather than block reward dependent. Bad news; that might take a few years/decades to happen.

Would pools benefit from ordinals?


I would conservatively say no. Not much.

There is speculation about ordinals becoming new sources of revenue for pools. This is how it might happen:

  1. Processing OOB transactions

  2. Keeping the rare ordinals to themselves and sell them at a higher price

Minting inscriptions onto those rare ordinals.

(There might be other potential scenarios that I am not aware of)

1. Pools Going Out of Bound


   OOB transactions are a type of transaction that is inserted into blocks by skipping the mempool or getting on a block while paying lower than expected fees. The pools should be incentivized to compromise on their income potential from tx fees to dedicate that blockspace to an out-of-bound transaction. In other words, there should be an off-chain transaction to convince pool operators do so. This event can be reviewed from three perspectives:

i)                    Pool operators’

ii)                   Miners’

iii)                 Owners of the Tx.

i) The pool operators could benefit from that as a new source of revenue which could be hidden from the miners. The pools may also choose to share that income with the miners but there would be no way for the miners to verify that.

ii) The miners, would be hurt by that regardless of the pools payment method. If PPLNS, that would mean lower Tx fees for miners, for FPPS that means lower average Tx fees on that specific day. The effect of that in FPPS is less compared to PPLNS. Miners would lose their trust in pool operators and get the feeling of being  betrayed by the trustee of their hashrate, “the pool operator”.

iii) The Tx owner, might have different motivations to send an OOB Tx.

a. Their Tx be bigger than the relay threshold ( about 400Kb)

b. The owner needs a set of Txs, such as a collection of inscriptions, to be confirmed in one single block.

c. The owner cares about how the block is mined and who mines the block. Compliance and energy mixture could be reasons for that.

d. The owner has a Tx stuck in the mempool because of low fees and for some reason they cannot use RBF or CPFP method to accelerate the Tx.

By committing an OOB Tx, the Tx owner accept the risk of delay in their Tx confirmation

 IF OOB Tx become a commonly accepted way of transacting on the Bitcoin blockchain, we could expect secondary block-space markets to emerge. Which I personally doubt that will take a big market share from the mempool.

As a user I want my Tx to be confirmed ASAP, I will set the right fees on my Tx and compete with others through the mempool, transparently and competitively.

Any transaction type other than the 4 groups mentioned above wouldn’t make sense to be processed through an out of bound method. Why? Because:

a)       Doesn’t make sense for the pool operator; A pool operator can fill up the block by grabbing a transaction form mempool. The outbound Tx should be paying reasonably higher fees, compared to avg Txs in the mempool, for it to make sense to be included in the block.

b)      Doesn’t make sense for Tx owners; The  Tx owners will have the option to pay an avg fee and get their TX approved through the mempool ASAP rather than paying higher fees and waiting for the pool to get lucky and mine a block sometime in the future.

As a conclusion, OOBs might become a thing, but I am very skeptical about their chance of getting a big market share.

2. Pools mining rare ordinals and sell them at higher prices?


Pools are the ones who receive the coinbase Tx and the first ordinal of that blocks will be under their control. They may choose to take that ordinal out of the pool wallet and sell it in a secondary market. Again, the miners of that pool might feel being betrayed by the pool.

3. Pools inscribing on their rare ordinals     

   The pool not only may take that rare ordinal out of the earned block reward, but also they may inscribe a rare inscription on that to make it more unique and potentially more valuable. The question is; should the miners also receive a share of that inscription and if yes, how much?



Ordinals loved by many and hated by many others, if we want them or hate them have found their way into Bitcoin blocks, and guess what, it is the code that rules, not our desires.

Ordinals have brought new utility and more competition for the Bitcoin block space that will benefit miners down the road. 2nd and 3rd layers such as Lightning network will also benefit from higher fees and competition on main layer.

The Pools though wouldn’t significantly benefit from ordinals. Pools are technically miners, they get paid a portion of their miners earnings. It has historically been proven that miners will mine with a pool that shares everything and all with their miners and they just simply vote with their hashrate.

The rarity of ordinals is something that could benefit pools/miners. There might be a market for rare ordinals such as the first ordinal of a newly mined block. We should wait and see, but what is obvious is pools can’t run away with that.