The Bitcoin Halving Is Here, and With It a Giant Surge in Transaction Fees

Bitcoin
completed
the
fourth
halving
in
its
15-year
history,
a
milestone
venerated
and
anticipated
in
the
blockchain
community
just
like
the
World
Cup
and
Olympics
are
in
sports.

The
once-every-four-years
event,
which
cuts
in
half
the
amount
miners
get
rewarded
for
creating
new
bitcoin,
took
place
at
00:09
UTC
on
Saturday
when

the
840,000th
block
was
added
to
the
Bitcoin
blockchain.

While

bitcoin’s
price
held
mostly
steady
above
$63,000
in
the
aftermath,
something
else
stole
the
show:
Transaction
fees
spiked
on
Bitcoin
as
the

launch
of
a
new
protocol
called
Runes
led
to
a
flurry
of
transactions
as
speculators
rushed
to
mint
digital
tokens
atop
the
blockchain.

Read
more:



Runes
Protocol
Launches
on
Bitcoin,
Sending
Fees
Soaring
as
Users
Rush
to
Mint
Tokens

The
halving
block
–
block
840,000
–
saw
a
record-high
37.6
BTC
fee
(worth
more
than
$2.4
million)
attached
to
it,
and
fees
remained
far
higher
than
normal
in
the
hour
after
the
halving.

The
winning
mining
pool
for
that
block
was
ViaBTC,
entitling
it
to
the
bitcoin
rewards
at
the
new,
just-lowered
rate
of
3.125
BTC
per
block,
worth
about
$200,000
at
the
current
price.
But
crypto
miners
had
been
competing
actively
for
the
block
since
it
contains
the
first
“sat”
–
the
smallest
denomination
of
bitcoin
–
following
the
halving.
These
“epic
sats”
that
follow
halvings
are
seen
as
collector’s
items,
and
some
mining
executives
have
suggested
that
this
individual
fragment
of
a
bitcoin
could
be
worth
millions
of
dollars,
or
many
multiples
of
the
current
price
of
an
entire
bitcoin.

The

Runes
protocol
for
fungible
tokens,
from
Casey
Rodarmor,
the
developer
behind
the
Ordinals
platform
that
launched
last
year
to
enable
NFTs
on
Bitcoin,
also
launched
at
block
840,000.
Less
than
an
hour
after
the
launch,
853
of
the
runes
had
already
been
etched,
according
to
the
website

runealpha.xyz.

A
quick
glance
at
the
fees
paid
by
users
to
get
transactions
included
in
blocks
might
reflect
the
intense
competition
by
users
to
mint
the
new
runes:
the
$2.4
million
fees
for
the
halving
block
compared
with
$40,000
to
$60,000
for
a
more
typical
block
before
the
halving.
Several
of
the
ensuing
blocks
also
came
with
more
than
$1
million
of
fees.

“We’ve
not
had
anything
like
this
in
the
history
of
Bitcoin,”
the
prominent
Bitcoin
developer
Jimmy
Song
said
during
a

livestreamed
watch
party
hosted
by
Tone
Vays.
“We’re
stressing
the
network
in
a
different
way,
in
ways
we’ve
never
stressed
it
before.”

On-chain
data
shows
that
the
median
satoshis
per
byte
(sats/vByte)
fee
has
exploded
post-halving
to
1,805
sats/vByte.
Pre-halving
on
April
19,
this
most
recent
median
fee
was
closer
to
100
sats/vByte.

(Sats/vbyte
(satoshis
per
byte)
is
a
measurement
of
the
fee
rate
used
to
conduct
a
Bitcoin
transaction,
indicating
how
many
satoshis
(the
smallest
unit
of
Bitcoin)
you
are
willing
to
pay
for
each
byte
of
data
in
your
transaction.)

In
layman’s
terms,
this
means
that
transaction
fees
have
surged,
with
medium-priority
transactions
costing
$146
and
high-priority
transactions
costing
around
$170.

Miners
are
expected
to
rely
more
on
higher
transaction
fees
and
a
potential
increase
in
bitcoin’s
price
to
offset
the
expected
decline
in
revenue
due
to
the
reduced
mining
subsidy,
especially
in
the
short
term.

For
CoinDesk’s
complete
coverage,
please
see
our



Bitcoin
Halving


landing
page.

The
mining
reward
–
which
dropped
to
3.125
BTC
from
6.25
BTC
during
this
halving
–
is
an
incentive
for
entities
who
contribute
computing
power
to
secure
Bitcoin.
The
miner
that
wins
the
race
to
add
each
new
block
to
the
network
takes
away
the
mining
reward,
the
amount
of
which
is
fixed
until
it’s
cut
again
at
the
next
halving,
as
programmed
by
the
cryptocurrency’s
elusive
creator,
Satoshi
Nakamoto.
Soaring
fees,
though,
in
the
aftermath
of
the
halving
suggest
miners
could
have
a
lucrative
new
revenue
stream
in
the
Runes
era
–
though
several
people
speaking
on
the
Tone
Vays
livestream
expressed
the
belief
that
the
fee
spike
will
end
up
being
temporary.

The
quadrennial
halving
is
seen
as
a
momentous
occasion
in
the
crypto
community
because
it
symbolizes
Bitcoin’s
original
concept
as
an
autonomous,
decentralized
financial
network
whose
monetary
policy
is
set
by
code,
as
opposed
to
human
organizations
like
governments
and
central
bankers.

Unlike
traditional,
or
fiat,
currencies,
whose
value
has
historically
been
eroded
by
inflation
and
government
printing,
bitcoin
is
designed
to
be
non-inflationary
with
a
maximum
total
supply
of
21
million
BTC
in
circulation.
With
the
halvings
every
four
years,
the
pace
of
new
issuance
of
bitcoins
reduces
over
time
until
the
last
one
is
mined,
likely
sometime
in
2140.

Read
More:



Bitcoin
Halving,
Explained

Historically,
halvings
have
been
followed
by
surges
in
bitcoin’s
price.
The
thinking
is
that
the
fewer
new
BTC
are
being
produced,
the
more
valuable
those
already
in
existence
become.
This
time,
the
outlook
is
murky.
Some
market
commentators
say

the
halving
is
already
priced
into
BTC
and,
therefore,
the
immediate
effects
may
be
muted.
Others
see
the

bitcoin
price
falling,
while
yet
others
have
suggested

a
rally
is
in
store.

The
potential
effects
of
this
present
halving
may
be
impossible
to
predict

due
to
the
profound
differences
in
the
Bitcoin
landscape
compared
with
the
three
previous
events.
Notably,
January’s
long-awaited
approval
of
spot
bitcoin
exchange-traded
funds
(ETFs)
in
the
U.S.
means
greater
institutional
investment
is
coming
to
BTC
by
orders
of
magnitude.

Also,
following
the
launch
of
the
Ordinals
protocol
early
last
year,
there
is
now
much
greater
activity
going
on
under
the
hood
of
Bitcoin,
with
developments
and
upgrades
to
the
network
potentially
bringing
far
more
utility
to
the
notoriously
conservative
ecosystem.