Bitcoin’s quadrennial “halving“, which happened recently, was expected to result in a significant revenue decrease for cryptocurrency miners because the rewards they would get for new data blocks would be slashed by half. However, this halving event also coincided with the launch of a new protocol by Casey Rodarmor called Runes – a system for creating digital tokens using the biggest and oldest blockchain – and its popularity has led to massive network congestion. Transaction fees have skyrocketed to unprecedented levels, providing Bitcoin miners with a revenue boom like never seen.
On April 20, the average fee for Bitcoin transactions reached a record $127.97, which is over seven times the typical fee rate on the preceding day and approximately double the previous record set three years ago. This is the day when the halving occurred and Runes was launched. According to YCharts, the total revenue for Bitcoin miners – comprising block rewards and transaction fees – reached a record-breaking $107.8 million for the day.
On the day the halving took place and Runes was launched, Bitcoin transaction fees averaged a record $127.97. This rate is more than seven times the average fee from the day prior, and almost double the previous record from three years ago. The total revenue for Bitcoin miners, combining block rewards and transaction fees, climbed to an impressive $107.8 million for the day, based on data from YCharts.
The development could be favorable for major Bitcoin mining organizations such as Marathon Digital Holdings (MARA), Riot Blockchain (RIOT), Hut 8 Mining (HUT) and Core Scientific (CORZ). Separately, Marathon announced its rebranding to “MARA,” the same as its stock ticker.
Bitcoin creator Satoshi Nakamoto’s original design, launched in 2009, included quadrennial halvings. This design was an effort to create a resistance against inflation, with a continuously decreasing rate of new issuance. However, as the rewards for miners decrease, questions have emerged whether they would continue to find sufficient incentives to continue mining on the blockchain – important since their work ensures the blockchain network’s security.
“We anticipate the present frenzy that is pushing fees to these levels will subside in the relatively near future. However, this incident is the latest evidence indicating that worries about Bitcoin’s long-term ‘security budget’ being misplaced,” wrote Bitcoin-centric investment company Ten31 in their newsletter released on Saturday.
Rodarmor’s new Runes protocol can be utilized to create new digital tokens, similar to those commonly found on the Ethereum blockchain but majorly absent from the Bitcoin ecosystem thus far.
The launch was highly anticipated because Rodarmor was the primary developer behind Ordinals, which became extremely popular after it debuted last year as a novel way to mint NFTs on Bitcoin, previously unthinkable.
Rodarmor himself worried aloud on a recent episode of his Hell Money podcast whether Runes might be a flop; if the main use of Runes was to spin up “meme coins” for fickle traders whose speculative interests can shift quickly, why would these traders instinctively gravitate toward a blockchain optimized for security rather than for speed or low costs?
Come, they did, however, and Runes may have outstripped even some of the most ambitious expectations.
According to the website RuneAlpha, as of April 21 some 4,923 runes had already been etched, with 801,124 runes transactions and 68,548 holders.
“The overall Runes ecosystem will likely be worth many billions of dollars,” the blockchain researcher Saurabh Deshpande wrote in a post on Decentralised.co.
Several crypto exchanges, including OKX and Gate.io, have already listed some of the newly minted runes, such as SATOSHI•NAKAMOTO, for trading.
Jimmy Song, an independent Bitcoin developer and commentator, wrote in a blog post on Saturday that the Runes frenzy has made it nearly possible to get a transaction included into certain fees without paying an exorbitantly high transaction fee.
“The Runes asset issuance has overridden almost every other use case at the moment,” Song wrote.
The Bitcoin Layer substack wrote that Runes appears to be a “game of greater fools in which essentially everybody loses,” but it does take up block space and may “accentuate the need for hastening the development of and further expansion of liquidity on layer-2 scaling solutions like the Lightning Network.”
Transaction fees as a percentage of the total miner revenue per block jumped to their highest level ever of 75%, according to the authors Joe Consorti and Nik Bhatia.
It’s “a preview of what’s to come in Bitcoin mining economics decades from now, as Bitcoin monetizes into a $10 trillion+ asset, demand for the network is orders of magnitude larger than today, and we’ve had a few more halvings,” they wrote.
Grayscale, the money manager behind the Grayscale Bitcoin Trust (GBTC), remarked on the potentially dramatic change in outlook for miners in an emailed newsletter on Saturday.
“If transaction fees normalize at a level higher than in the past, the impact of the halving on miner revenue will be dampened,” Grayscale wrote.
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