Bitcoin Miner Revenue Drops, Runes Hype Fades

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Recent data from CryptoQuant indicates a steep decline in daily revenue for Bitcoin miners, falling to $63.6 million on Tuesday after excitement for the Runes protocol diminished.

This downturn aligns with the effects of the recent Bitcoin halving event, which took place last Friday night. The event halved the issuance of new Bitcoin per block to 3.125. Consequently, new Bitcoin issuance was reduced from 900 to 450.

Post-Halving Volatility: Miner Profits Plummet as Fees Drop

Despite this reduction, miner revenues soared to $106.8 million on halving day due to record-high Bitcoin transaction fees. However, these revenues quickly retreated to about $63.6 million.

This figure represents a 35% drop from the pre-halving daily earnings, which had previously peaked at around $78 million.

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On halving day, the transaction fees escalated to an unprecedented $80 million, accounting for 75% of total miner revenue.

This surge was primarily driven by network congestion triggered by the launch of the Runes protocol. The protocol introduces meme coins into the Bitcoin blockchain.

It deviates from the conventional BRC-20 token standard by employing an Unspent Transaction Output (UTXO) model. This model facilitates the creation of altcoins through an “etching” process directly on the network.

Since then, transaction fees have normalized to levels similar to those before the halving, making up about 35% of the miner’s total revenue. Remarkably, the first halving block alone amassed $2.6 million in fees and block rewards, positioning itself near the top of Bitcoin’s most valuable blocks. The following blocks also fetched high values, ranging from $1.3 million to $2 million.

Analysis reveals that the first 77 blocks of the current epoch generated $75 million in revenue. This starkly contrasts the $35 million produced by the final 77 blocks of the preceding epoch.

Baylor Landing, a director at Bitcoin miner Core Scientific, highlighted the impact of these changes.

“The halving? More like the doubling,” Landing said, referencing the significant revenue increase post-halving.

However, as the initial excitement around Runes waned, congestion and fees decreased. Data from Dune Analytics shows that Runes transactions had fallen to 33.6% by April 24. Rune transactions previously accounted for 69.5% of all transaction fees on halving day.

Read more: What Happened at the Last Bitcoin Halving? Predictions for 2024

Share of Fees on Bitcoin Network Based on Transaction Types. Source: Dune

This reduction in block reward, combined with fluctuating transaction fees, has placed pressure on miners’ earnings. The hash price currently has fallen to $0.07 per TH/s, marking its lowest since October 2023.

Hash price measures revenue per unit of computational power. Therefore, this drop raises concerns about the sustainability of mining operations, particularly as the industry braces for further declines in miner revenue.

In response, leading mining companies are reportedly strengthening their financial positions. According to research by Bernstein, firms such as Riot Platforms (RIOT), Marathon Digital Holdings (MARA), and Hut 8 Corp (HUT) are focusing on strategic expansion and consolidation.

Read more: 5 Best Platforms To Buy Bitcoin Mining Stocks Ahead of 2024 Halving

The CEO of CleanSpark anticipates that the industry will eventually consolidate around four major players. RIOT, MARA, CLSK, and Cipher Mining (CIFR) are expected to be at the forefront.

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