Runes Dominate Majority of Bitcoin Transactions After Halving
Harvey Hunter
Last updated:
April 25, 2024 08:16 EDT
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2 min read
Runes have become the driving force behind up to 68% of Bitcoin transactions since the halving, but the profitability for Bitcoin miners has started to decline.
Similar to BRC-20s, Runes is a protocol that operates on the Bitcoin network. It pays fees in Bitcoin to create new tokens.
However, Runes uses the Unspent Transaction Output (UTXO) model to engrave new tokens on Bitcoin. This is different from Ordinals’ account model, which relies on “inscriptions,” as explained by Rodarmor, a protocol explainer.
The protocol allows users to inscribe individual satoshis with unique identification numbers and embed them with any desired information directly into the Bitcoin blockchain.
According to a Dune Analytics dashboard shared by the blockchain research firm Crypto Koryo, Runes has processed over 2.38 million transactions since its launch on April 20th.
Compared to Ordinary peer-to-peer Bitcoin transactions, BRC-20s, and Ordinals, Runes accounted for 68% of all Bitcoin transactions.
On April 23rd, Runes experienced its highest transaction volume, with over 750,000 transactions. However, the following day, the number of transactions almost halved to 312,000.
The initial surge in demand was driven by the competition for the most valuable piece of digital real estate in Bitcoin history, which occurred during the halving block 840,000. Users utilized the Runes protocol to engrave “rare satoshis” on the block.
As a result, Runes contributed to over $2.4 million in miner fees, representing more than 70% of the total fees on halving day.
Can Runes Rescue Struggling Miners?
The Bitcoin Halving resulted in a significant reduction of mining rewards from 6.25 BTC to 3.125 BTC, severely impacting the income of Bitcoin miners and leaving them vulnerable.
Initially, the Runes Protocol was seen as a potential solution for miners to overcome their financial struggles and generate additional income. According to the pseudonymous Ordinals developer Leonidas:
However, doubts have arisen as daily total fees have fluctuated between 33% and 69% since the halving.
The community is divided on whether Runes can provide a sustainable revenue stream for Bitcoin miners.
Despite these uncertainties, data from CryptoQuant shows that the Bitcoin Miners’ Position Index (MPI) has ranged from -1 to -0.15 since the halving. This indicates that there has been no significant movement in miners’ Bitcoin holdings and there is no clear intention for a sell-off.
The situation may change as Runes potentially loses momentum, especially as the initial excitement surrounding its release fades.
However, Runes is not the only hope for miners, as recent groundbreaking developments offer potential alternative sources of revenue to mitigate the impact of the halving.
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