Runes Protocol: A Game-Changer for Bitcoin Miners, But Challenges Remain
The recent Bitcoin halving event had a surprising outcome for miners, thanks to the launch of Casey Rodarmor’s Runes protocol. Despite the expected revenue cut from the halving, miners saw a significant increase in total revenue due to soaring transaction fees. The popularity of the Runes protocol caused network congestion and led to unusually high transaction fees, with an average fee of $127.97 on April 20, 2024.
The high fees associated with Runes transactions have been a boon for miners. The CEO of Bitcoin mining company Cormint, Jamie McAvity, explained that the high fees paid by Runes transactions have kept the hashrate stable and have signaled bullish activity for the Bitcoin-native asset issuance technology. Mining pool ViaBTC discovered the halving block and earned 37.7 BTC in fees due to Runes transactions.
Runes transaction fees are higher than typical BTC transaction fees, with a minimum fee of 100 satoshi/Byte. This has led to varied fee earnings for different mining pools, with ViaBTC outperforming others in terms of fees earned. Cormint’s revenue doubled the day after the halving, thanks to the Runes protocol.
While Runes has been beneficial for miners, there are concerns about its impact on the Bitcoin ecosystem. Luke Dashjr, co-founder of non-custodial Bitcoin mining pool OCEAN, highlighted issues with the bidding mechanism of Runes, resulting in failed bids being mined and spamming Bitcoin’s blockchain. There are also concerns about the use of Runes for non-currency fungible tokens, which could lead to scams on the Bitcoin network.
Despite the benefits of Runes, some believe that the high transaction fees associated with it will not be sustainable in the long term. Dashjr and Joe Downie, CMO of Bitcoin mining pool NiceHash, both suggest that the fees will eventually decrease. However, Rena Shah, VP of Products at Trust Machines, believes that the model of high fees on the Bitcoin network is unsustainable and expects an influx of Bitcoin layer 2 solutions to accommodate protocols like Runes.
Alexei Zamyatin, co-founder of Bitcoin L2 solution Build on Bitcoin, agrees that Bitcoin needs L2 solutions to compete with Ethereum and Solana. He believes that high transaction fees are unrelated to Runes and that Bitcoin’s high fees are part of the hype cycle. Nonetheless, miners like Cormint see the high fees as necessary to maintain the mining incentive, and they view it as an opportunity for developers to scale Bitcoin using L2 solutions.
In conclusion, the Runes protocol has had a significant impact on the Bitcoin mining industry, boosting miners’ revenue through high transaction fees. However, challenges remain, and the sustainability of these high fees is uncertain. The Bitcoin ecosystem may need to explore L2 solutions to address scalability and fee issues in the long run.
