Bitcoin miners benefit from high transaction costs due to runes

Bitcoin miners are facing unprecedented profits despite the expected drop in their income due to the halving. This event, which takes place every four years, halves the rewards for creating new data blocks. However, the recent introduction of the Runes Protocol has caused massive congestion on the network, significantly increasing transaction fees and creating an unexpected windfall for miners.

Transaction fees on the network reached an average of $127.97 on April 20, when the halving took place in conjunction with the launch of the Runes Protocol – an amount more than seven times higher than the day before and about double the previous record three years ago. The miners’ total revenue, including block rewards and transaction fees, reached a record $107.8 million for just one day. Major mining companies such as Marathon Digital Holdings, Riot Blockchain, Hut 8 Mining and Core Scientific may experience a positive boost as a result.

Successors of Ordinals

After the launch of the Ordinals protocol, the Runes protocol was recently introduced by developer Rodarmor. This protocol makes it possible to create digital tokens on the Bitcoin blockchain, a concept best known from Ethereum. But originally, Bitcoin was always present and possible. In recent years, the hype surrounding these tokens and new ways has continued to increase. It’s largely a lot of speculation.

Despite Rodarmor’s concerns about the potential short lifespan of Runes, the protocol appears to be in demand. Statistics from the website RuneAlpha show that 4,923 runes have already been engraved with more than 800,000 transactions and almost 70,000 holders. Several crypto exchanges have listed some of the newly created runes, including SATOSHI•NAKAMOTO, for trading. The market appears to be exceeding the protocol’s ambitions.

Bitcoin developer and commentator Jimmy Song notes that the popularity of Runes makes it extremely difficult to get included in certain blocks without high transaction fees. He emphasizes that the issuance of Runes assets currently overshadows other applications. This situation highlights the growing importance of expanding liquidity on scaling solutions such as the Lightning Network. Transactional costs recently reached an all-time high of 75% as a percentage of total revenue per block.

The interest in Runes exposes how the current use of block space reinforces the need for layer-2 solutions to ensure a scalable and secure environment in the bitcoin ecosystem. At least, if the goal is to allow everyone to transact on the network.