Bitcoin Miners Reap Windfall as ‘Runes’ Debut Sends Transaction Fees to Record Highs

Bitcoin’s
once-every-four-years
“halving,”
which
took
place
late
last
week,
was
supposed
to
bring
a

steep
cut
in
revenue
for
crypto
miners,
since
their
rewards
for
new
data
blocks
would
drop
by
50%.

Instead,
the
simultaneous
launch
of
Casey
Rodarmor’s
new
Runes
protocol
–
for
minting
digital
tokens
on
top
of
the
oldest
and
largest
blockchain
–
has
proven
so
popular
that
it’s
caused
massive
network
congestion,
sending
transaction
fees
to
record
levels
and
showering
Bitcoin
miners
with
a
windfall
like
never
before.

Bitcoin
transaction
fees
averaged
a
record
$127.97
on
April
20,
when
the

halving
took
place
and
Runes
launched,
based
on
coordinated
universal
time.
That’s
more
than
seven
times
the
average
fee
rate
on
the
day
before,
and
roughly
double
the
previous
record
set
three
years
ago.

Total
revenue
for
bitcoin
miners,
which
includes
the
block
rewards
as
well
as
transaction
fees,
soared
to
a
record
$107.8
million
for
the
single
day,
according
to
YCharts.

The
development
could
be
bullish
for
big
bitcoin
mining
firms
including
Marathon
Digital
Holdings
($MARA),
Riot
Blockchain
($RIOT),
Hut
8
Mining
(HUT)
and
Core
Scientific
(CORZ).
(Marathon
announced
separately
on
Friday
that
it
was
rebranding
to
“MARA,”
which
happens
to
be
its
stock
ticker.)

The
quadrennial

halvings
were
part
of
Bitcoin
creator
Satoshi
Nakamoto’s
original
design
when
it
was
launched
in
2009,
an
effort
to
harden
the
original
cryptocurrency’s
resistance
to
inflation
with
an
ever-decreasing
pace
of
new
issuance.
But
with
the
rewards
shrinking
for
miners,
the
question
has
been
whether
they
would
see
adequate
incentives
to
continue
mining
on
the
blockchain
–
crucial
since
their
efforts
are
essential
to
the
blockchain
network’s
security.

“We
expect
the
particular
frenzy
pushing
fees
to
these
levels
to
die
down
in
the
relatively
near
term,
but
this
episode
is
the
latest
indication
that
concerns
about
bitcoin’s
long-term
‘security
budget’
are

misplaced,”
the
Bitcoin-focused
investment
firm
Ten31
wrote
in
a
newsletter
on
Saturday.

Rodarmor’s
new

Runes
protocol
can
be
used
to
spin
up
new
digital
tokens
like
those
common
on
the
Ethereum
blockchain
but
thus
far
mostly
absent
from
the
Bitcoin
ecosystem.

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
impossible
to
get
a
transaction
included
into
certain
blocks
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.