This Bitcoin halving has been unlike any other.
The first 60 blocks post-halving brought miners a new ATH of $54M in transaction fees alone.
The reason? Runes.
But will Runes ruin the expected post-halving Bitcoin ATH expectations?
In essence, Runes on Bitcoin are akin to ERC-20 tokens on Ethereum, mainly tailored for memecoins.
Degens gonna degen.
The launch of Runes led to Bitcoin transaction fees hitting a historical all-time high, with an average of $127 paid per transaction yesterday.
But what is the realistic impact of Runes on the Bitcoin blockchain and miner rewards?
On Solana, the market cap of the memecoins tracked on @coingecko is $7.2B. On @dexscreener, Solana has ~$700M in 24h trading volume, and more than 50% of it is attributed to memecoins.
On @base, the market cap of memes is nearing $1.5B with a 24-hour trading volume of $384M, and about half of that is directed towards memecoins.
Ethereum fares better, primarily due to being the hub of DeFi altcoins.
In the coming weeks, and possibly months, Runes are expected to reach the peak of hype, much like Ordinals did a year ago.
Developers will likely seize this trend to introduce new Runes, some of which may yield significant returns, sparking increased greed and FOMO.
Miners will enjoy much higher returns as people keep aping and this... ruins the classic mining economy post-halving.
On April 13, when the block reward was 6.25 BTC, miners earned $387,500 per block.
On April 20, the reward is 3.125 BTC, or roughly $200,000.
Block rewards contribute only a portion of the revenue generated by miners. The other part comes from transaction fees.
In the past, transaction fees were not the primary source of income for miners. However, as of yesterday, this scenario has shifted.
Prior to the launch of Runes, about 80% of miner income came from block rewards, with only 20% from transaction fees.
Now, due to the increase in transaction activity and fees, miner profitability is LESS dependent on the BTC price and MORE dependent on the degen FOMO.
On one hand, the impact of the halving on Bitcoin's inflation rate continues, increasing the scarcity of $BTC.
On the other hand, Runes balance the effect of the halving on mining revenue, benefiting smaller mining operations and ultimately enhancing network security.
So theoretically, after the launch of Runes, mining will remain profitable and lucrative even if the Bitcoin price continues decreasing.
Without taking Runes into consideration, @jpmorgan expected
that post-halving the production cost would increase from $26,5K to ~$53K.
They anticipated a potential 20% decrease in the Bitcoin network's hashrate post-halving, which could further reduce the estimated production cost to $42K.
However, the Runes reality is different, and this change has not been priced yet.
The only judge? Time.