Bitcoin MEV Explained: Insights and Future Outlook

The concept of MEV (Miner Extractable Value) in Bitcoin emerged as early as 2013. While it is still in its infancy compared to Ethereum, the introduction of protocols like BRC-20, Ordinals, and Runes is driving a rapidly evolving Bitcoin ecosystem that is expected to bring more programmability, expressiveness, and MEV opportunities in the future.

This report will explore the increasing complexity of MEV on Bitcoin and assess its potential impact on the broader ecosystem.

Why is Bitcoin MEV Gaining Increasing Attention?

Before the introduction of Ordinals, MEV on Bitcoin was not widely recognized or prioritized. The focus was primarily on the Lightning Network and sidechain mining attacks. However, with the Taproot upgrade, Bitcoin gained enhanced programmability and expressiveness, paving the way for the emergence of protocols like Ordinals and Runes. These protocols have brought MEV concerns to the forefront, particularly with the competitive fee bidding in the inscription market.

Moreover, Bitcoin’s 10-minute block time has exacerbated the issue, making it easier for inexperienced users to fall victim to various forms of MEV attacks, such as fee sniping during inscription market auctions. As block rewards continue to decrease, miners’ profitability is under pressure, forcing them to focus more on maximizing transaction fees, which could explain the rise in MEV activity.

The chart below shows a significant surge in fees relative to block rewards after the launch of Ordinals and Runes, at one point accounting for over 60% of Bitcoin mining’s total revenue. This phenomenon reflects the profound impact MEV activity is having on Bitcoin miners’ income structure and signals the potential of MEV within the Bitcoin network going forward.