Bitcoin’s halving has come and gone, but this cycle brings with it a few nuances that deserve closer attention. Unlike previous halvings where the bull market doesn’t even start until post-halving, BTC saw an all-time high in the weeks preceding the event. This halving also marked the launch of Casey Rodarmor’s Runes protocol, a new means to deploy tokens atop Bitcoin, which has garnered much-expected interest: accounting for 72% of transactions for 24 hours a couple of days after the halving.
The reduction in block rewards from 6.25 to 3.125 bitcoins per block calls attention to the role transaction fees will play in sustaining mining operations. However, amid this rising concern, as it imparts to Bitcoin the speculative market fueling meme-coins, the Runes protocol demonstrates the capacity of transaction fees to account for most of the miner revenue when Bitcoin is actually being used.
#A Spike In Fee Volume
The initial outsized impact on miner revenue resulting from the launch of Runes is undeniable. As transaction volume spiked with Runes minting and etching activity, miners raked in around $107 million in profits. Thanks to the fee bidding war at the Runes launch, miners were compensated the most ever.
Revenue fees spiked as Runes protocol went live following the halving.
Fees surged during the Runes launch, accounting for ~72% of miner revenues, also an all-time high. Much of this frenzy was driven by the use of Runes protocol to launch a slew of meme-coins, bringing similar speculative markets to Bitcoin as seen across Ethereum, Solana, and other DeFi ecosystems.
The spike in volume left a high watermark on the chart.
Runes brings new elements to the table for Bitcoin-based tokens, allowing for more efficient distribution compared to Ordinal’s BRC-20s. However, similar to BRC-20 tokens, Runes also necessitates packaging for sales listings, which may involve processes like token splitting. The result is a comparable level of overhead to BRC-20 token transactions.
As with BRC-20 tokens, with Runes it’s still possible to be front-run and have a transaction pushed back block after block. In some cases, if miners are not bribed to accelerate a transaction, time-to-finality minting a Rune-based token can exceed the mint window. If a mint transaction validates after the mint window has closed, the spender will lose any bitcoin spent in the mint attempt without successfully minting anything.
Some users felt the pains of failed mints more than others.
Even with its expected growing pains, Runes indicates a growing appetite to use Bitcoin for literally anything, even if it’s simply trading memes back and forth.
Since this trading is done directly on Bitcoin mainnet, it is particularly attractive for people who are bullish on the extreme decentralization and lindyness of the network. While these properties aren’t prerequisites for memecoin trading, hence why Solana has seen so much success, it is a unique advantage for Bitcoin. Pair this with speculation on the fact that the “ancient Bitcoin whales” won’t be able to resist buying these tokens, and a frothy meme market is born on Bitcoin mainnet.
#Impact on Miners
The immediate rush to mint Runes caused fees to peak at an all-time high, however, fees have since returned to around $25 per transaction, the same rate they were before the halving.
With the initial hype faded, average fee rates abated to levels seen before the halving.
With the opportunity from Runes, miners managed to contribute more hash-power to the network than ever before following the halving despite the reduction in block rewards, reaching an all-time of 761 EH/s. Despite the extra income from transaction fees, the production cost for a bitcoin has nearly doubled since the halving, emphasizing the strain on miners’ operations.
To shore up operations in the meantime, miners are turning to more efficient strategies, such as mining in regions with lower energy costs, or dedicating some of their computing resources towards Artificial Intelligence for extra income.
Another notable post-halving development—the formal designation of OP_CAT as BIP 420, an opcode previously disabled by Satoshi Nakamoto over security concerns that have since been resolved. Proposed to enhance Bitcoin's scripting capabilities, OP_CAT facilitates the concatenation of data strings, broadening Bitcoin's potential to support applications like smart contracts, secure bridges, on-chain trading, and zk proof verification.
#The Role of Platforms like Mezo
Will measures like alternative revenue streams or cutting energy costs be enough for Bitcoin miners? One thing is for sure: it will take more than hype-driven spikes to provide long-term growth on Bitcoin. Even if an ecosystem like Runes continues to grow, there is still a dire need for alternative and sustainable ways to bolster the Bitcoin fee market. Mezo brings applications to Bitcoin as an Economic Layer for commerce and programmability.
Foremost, Mezo’s architecture is aligned with Bitcoin, and this extends to miners. Each transaction on the network takes a little bitcoin out of circulation, a mechanism designed to provide greater value to bitcoin holders through the dynamics of supply and demand. Mezo also accrues all network fees in bitcoin, providing additional utility to the token.
However, Mezo can bring the most value to Bitcoin thanks to its programmability. Mezo gives developers who want to build high-performance, Bitcoin-first applications (without waiting for BIP 420) a head start with its EVM-compatible programming layer.
By serving as a springboard for developers to deploy more dynamic applications directly aligned with Bitcoin that allow for the use of BTC as an everyday payment method, Mezo will increase BTC-based fee revenue. With that, Mezo can introduce an enduring means for fee-based volume that miners need to sustain operations and keep Bitcoin secure.
#Mezo Strengthens Bitcoin And Enables Developers
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