Breaking News! Bitcoin Breaks Through $66,000 Threshold - “Halving” Increases Miner Earnings Instead of Decreasing Them: What's Going On?

On Monday (April 22), Bitcoin briefly surged past $66,000. Over the weekend, Bitcoin underwent its fourth halving, reducing miner rewards from 6.25 to 3.125 bitcoins. The market initially expected miners to sell off heavily to maintain operational costs. However, contrary to expectations, the launch of the fungible token protocol Runes sparked a frenzy, driving Bitcoin transaction fees through the roof and pushing miner earnings to a historic high of $107 million in a single day.

Julio Moreno, head of research at CryptoQuant, shared data showing that Bitcoin miner earnings hit a historic high of $107 million on Saturday, significantly surpassing the previous record of $77 million set in April 2021.

After the launch of Runes, Bitcoin network fees skyrocketed, with total block rewards for miners exceeding 17 bitcoins, even briefly reaching 40.751 bitcoins. This prompted the co-founder of the world's largest mining pool, F2Pool, Shen Yu, to tweet: "This isn't Bitcoin halving; it's a doubling."

It's well-known that Bitcoin miner earnings consist of block rewards and transaction fees. In this record-setting $107 million, transaction fees comprised the largest part, accounting for 75% or $80.5 million, while the remaining $26.2 million came from block rewards, representing about 24.6%.

Baylor Landry, an executive at SC&P, also noted that in the last 77 blocks before the fourth halving, miner earnings totaled only $35 million. However, the first 77 blocks after the halving generated $75 million in miner earnings, making the halving seem more like a doubling.

Investors are keen to know whether this situation is sustainable.

A closer look reveals that the sharp increase in Bitcoin transaction fees post-halving is primarily related to the Runes protocol, which launched concurrently with the halving. Upon its launch, users rushed to mint Rune tokens, causing Bitcoin transaction fees to skyrocket, with high-priority fees peaking at 2200 Sat, approximately $200.

Data from Dune Analytics shows that post-halving, transactions related to the Runes protocol accounted for as much as 57.7% of total Bitcoin transactions.

Source: Dune Analytics

However, analysts warn that unless the popularity of Runes continues, it's reasonable to assume that miner earnings will return to normal levels. If the price of Bitcoin doesn't significantly increase, earnings might even fall below pre-halving levels.

Runes, proposed by Ordinals founder Casey Rodarmor in September 2023, aims to address network congestion and abnormalities caused by the BRC-20 on the Bitcoin network, which affects regular transactions. It's a more lightweight and streamlined asset issuance protocol based on UTXO. Unlike BRC-20, which stores data in the witness part of transactions, Runes uses the OP_RETURN function to store data directly in Bitcoin's UTXO, ensuring token data is separate from transaction data, making token management simpler and more transparent.

Source: Delphi Digital

According to mempool data, Bitcoin network transaction fees have peaked at 2084 Sat/vB for high-priority fees.

Although fees have since dropped, they remain much higher than usual. No-priority fees are at 20 Sat/vB, low-priority fees at 942 Sat/vB, medium-priority fees at 1099 Sat/vB, and high-priority fees at 1190 Sat/vB.

Leonidas, a developer at Ordinls and founder of Runestone, mentioned that DOG GO TO THE MOON, a meme coin airdropped to Runestone, was engraved in a transaction at 1258757 Sat/vB. Currently, the minimum fee required to mint runes through Luminex is 1071 Sats/vB.