Runes Take the Lead in 68% of Bitcoin Transactions Following the Halving
Harvey Hunter
April 25, 2024 08:16 EDT
Runes have emerged as the dominant force in Bitcoin transactions, making up to 68% of all transactions since the halving. However, the earnings of Bitcoin miners have started to decline.
Similar to BRC-20s, Runes is a protocol that utilizes the Bitcoin network and pays fees in Bitcoin to generate new tokens. However, Runes differs from Ordinals in its approach. It uses the Unspent Transaction Output (UTXO) model to “etch” new tokens onto the Bitcoin blockchain, as explained in a protocol explainer by Rodarmor.
The protocol allows users to inscribe individual satoshis with unique identification numbers and embed them with arbitrary data directly into the Bitcoin blockchain. Since its launch on April 20th, Runes has processed over 2.38 million transactions, according to data from the Dune Analytics dashboard shared by blockchain research firm Crypto Koryo.
When compared to Ordinary peer-to-peer Bitcoin transactions, BRC-20s, and Ordinals, Runes accounted for 68% of all Bitcoin transactions. On April 23rd, Runes recorded its highest volume of transactions, with over 750,000. However, the following day saw a significant drop to 312,000 transactions.
The initial surge in demand came from users competing for the most valuable piece of digital real estate in Bitcoin history – halving block 840,000. They utilized the Runes protocol to etch “rare satoshis” onto the block. As a result, Runes contributed to over $2.4 million in miner fees, which accounted for over 70% of the total fees on halving day.
The Bitcoin Halving resulted in a reduction of mining rewards from 6.25 BTC to 3.125 BTC, posing a threat to the income of Bitcoin miners and leaving them vulnerable. Runes Protocol was initially seen as a lifeline for struggling miners, offering a new source of income, according to pseudonymous Ordinals developer Leonidas.
However, the sustainability of Runes as a revenue stream for Bitcoin miners has come into question, as daily total fees have fluctuated between 33% and 69% post-halving. The community is divided on whether Runes can provide a stable income for miners.
Despite these concerns, data from CryptoQuant shows that the Bitcoin Miners’ Position Index (MPI) has remained relatively stable, ranging from -1 to -0.15 post-halving. This indicates that miners are holding onto their Bitcoin and there is no clear intent for a sell-off.
The situation may change as Runes potentially loses momentum, especially as the initial excitement surrounding its release fades. However, there is hope for miners with recent groundbreaking developments offering potential alternative revenue sources to combat the impact of the halving.
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