Bitcoin Halving Event Sees Miners Earning Record Transaction Fees

On April 20, 2024, Bitcoin miners collectively earned $78.3 million in transaction fees, setting an all-time high for USD-denominated transaction fee revenue on the Bitcoin network. This surge in fees was largely driven by the launch of the Runes protocol, which allows users to create fungible tokens on the Bitcoin blockchain. The protocol, designed by Casey Rodarmor, went live on April 19, coinciding with Bitcoin’s fourth halving event.

The halving event, which occurs every four years, reduces the block subsidy from 6.25 to 3.125 BTC, effectively cutting miner revenue by 50%. However, the launch of the Runes protocol has more than made up for this reduction, with miners earning triple their pre-halving revenue, mostly from transaction fees. In fact, total miner revenue has exceeded $100 million daily, with transaction fees accounting for the majority of this amount.

The surge in transaction fees was driven by users bidding for block space to mint tokens on the Runes protocol. As a result, medium-priority transactions spiked to $146, and high-priority transactions reached $170. However, these fees have since dropped to $8.48 and $9.32, respectively.

Despite the current abnormal fee revenue, analysts expect 15% of miner revenue to come from network transaction fees on a sustainable basis. This is a significant increase from the pre-halving level, where transaction fees accounted for only 1-2% of miner revenue.

The Bitcoin halving event and the launch of the Runes protocol have also led to an increase in block space demand, with users spending a record amount on block space. This increased demand has led to a rise in the average transaction fee, which has been trending upwards since the halving event.