Bitcoin is once every four years “reduce by half“, which took place at the end of last week, was supposed to bring a sharp drop in revenue for crypto minerssince their rewards for new data blocks would decrease by 50%.
Instead, the simultaneous launch of Casey Rodarmor’s new Runes protocol – to mint digital tokens on top of the oldest and largest blockchain – proved so popular that it caused massive congestion of the network, sending transaction fees to record highs and flooding Bitcoin miners with a bonanza like never before.
Bitcoin transaction fees averaged a record high of $127.97 on April 20, when the halving took place and the Runes were launched, based on Coordinated Universal Time. That’s more than seven times the previous day’s average fee rate, and about double the previous record set three years ago.
Bitcoin miners’ total revenue, which includes block rewards as well as transaction fees, soared to a record $107.8 million for a single day, according to YCharts.
This development could be bullish for major Bitcoin mining companies, including Marathon Digital Holdings ($MARA), Riot Blockchain ($RIOT), Hut 8 Mining (HUT), and Core Scientific (CORZ). (Marathon separately announced Friday that it was rebranding as “MARA,” which happens to be its ticker symbol.)
Quadrennial halvings were part of Bitcoin creator Satoshi Nakamoto’s original design when it launched in 2009, with the aim of making the original cryptocurrency more resilient to inflation with a pace of new emissions still decreasing. But with rewards for miners dwindling, the question is whether they will see adequate incentives to continue mining the blockchain – which is crucial since their efforts are essential to the security of the blockchain network.
“We expect the particular frenzy that is pushing fees to these levels to abate in the relatively short term, but this episode is the latest indication that concerns about Bitcoin’s long-term “security budget” are growing. and more important. lost“Bitcoin-focused investment firm Ten31 wrote in a newsletter on Saturday.
Rodarmor’s new Runes protocol can be used to create new digital tokens like those common on the Ethereum blockchain, but so far mostly absent from the Bitcoin ecosystem.
The launch was highly anticipated because Rodarmor was the lead developer behind Ordinals, which became extremely popular after debuting last year as a new, previously unthinkable way to create NFTs on Bitcoin.
Rodarmor himself worried out loud in a recent episode of his Hell Money podcast if the Runes could be a failure; If the primary use of Runes was to create “meme coins” for fickle traders whose speculative interests can change quickly, why would these traders instinctively turn to a blockchain optimized for security rather than speed or low costs ?
However, they did, and the Runes may have exceeded even some of the most ambitious expectations.
According to the website RuneAlphaas of April 21, some 4,923 runes had already been carved, with 801,124 rune transactions and 68,548 holders.
“The overall Runes ecosystem will likely be worth several billion dollars,” wrote blockchain researcher Saurabh Deshpande in an article on Decentralized.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, the Runes frenzy made it almost possible to include a transaction in certain fees without paying exorbitant transaction fees.
“Issuing Runes assets has replaced almost all other use cases at the moment,” Song wrote.
The Bitcoin layer sub-pile wrote that Runes appear to be a “greater fools’ game in which virtually everyone loses”, but that they take up block space and can “emphasize the need to accelerate the development and expansion of liquidity on layer 2 scaling solutions like the Lightning Network.”
Transaction fees as a percentage of total miner revenue per block have reached their highest level ever, at 75%, according to authors Joe Consorti and Nik Bhatia.
It’s “a preview of what’s to come in the Bitcoin mining economy in a few decades, as Bitcoin monetizes to become a $10 trillion+ asset, demand for the network is at an order larger than today, and we had a few extra halves,” they wrote. .
Grayscale, the fund manager behind Grayscale Bitcoin Trust (GBTC), highlighted the potentially dramatic change in miners’ outlook in an emailed newsletter on Saturday.
“If transaction fees normalize at a higher level than in the past, the impact of the halving on miner revenues will be mitigated,” Grayscale wrote.