Runes’ Meteoric Rise and Record-Setting Months

Following its launch, the Runes protocol quickly emerged as a prominent player by utilizing the highest bandwidth on the Bitcoin network. On April 23, it registered 753,000 transactions, accounting for over 81% of all transactions on the Bitcoin blockchain. This achievement surpassed competitors like Ordinals and BRC-20, showcasing the potential of Bitcoin-based NFTs.

Although Runes maintained its momentum through early May, it suffered a sharp decline mid-month. While June saw a brief resurgence, the number of transactions plummeted by 88% by the month’s end.

The Performance of Runes NFTs

During its first four months, Runes delivered an impressive performance, surpassing 15 million total transactions and generating $160 million in transaction fee revenue by August. On August 23, the protocol recorded a brief recovery with 255,000 transactions, but this revival was short-lived.

Interest in the protocol waned after August, and transaction volumes failed to return to previous levels. The downward trend became more pronounced in Q4 of 2024, as transaction numbers continued to decline.

The broader NFT market also struggled throughout 2024, experiencing seven consecutive months of contraction. In September, monthly digital collectible sales dropped below $300 million for the first time since 2021. While November and December saw a brief recovery, it wasn’t enough to reverse Runes’ decline.

What Lies Ahead?

Despite its strong start, Runes ended the year on a weak note. The overall downturn in the NFT market, declining investor interest, and concerns about the sustainability of Bitcoin-based NFTs raise questions about the protocol’s future. Runes’ trajectory highlights the challenges of maintaining momentum in an evolving and volatile market.

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A Rollercoaster Month for Bitcoin Miners

Runes, a new token standard released during the fourth halving of Bitcoin on April 20, 2020, at first caused a rise in the income of Bitcoin miners. The protocol lets users write different types of media onto the Bitcoin network, which is why memecoin and nonfungible token enthusiasts like it. From April 26 to 30, the daily new Rune etchings average was around 14,700, which was a great financial help during the halving that reduced the block subsidy to 3.125 BTC (around $196,800) at current prices.

Sharp Decline in Transactions and Fees

Despite that, the recent decrease is very noticeable. During the last six days, the number of new runs etched daily has decreased to less than 250, with the lowest being 157  on May 13. This sudden drop in activity has led to a great reduction in the fees miners charge for transactions. In late April, miners were getting hundreds of thousands of dollars daily, but the recent figures show a dramatic fall.

Since its inauguration, Runes has amassed a total of $4.5 million. Bitcoin miners made 5 million dollars in transaction fees, which is about $189,000 per day. Although the number of new Runes has dropped, these transactions still make up the majority of Bitcoin’s activity in May, mainly on platforms like Magic Eden, OKX, Ordinals Wallet, and UniSat.

The Future of Runes and Bitcoin

The runes were developed by the ordinary inventor Casey Rodarmor to make the blockspace usage of Bitcoin more efficient than the BRC-20 tokens. Contrary to BRC-20s, Runes are compatible with Bitcoin’s UTXO model; thus, UTXOs are able to store the balances of fungible tokens like Runes.

Though it is true that in the beginning people are very excited and they get a lot of money from it, Rodarmor conserves a practical attitude toward Runes. In the recent interview, he emphasized that Runes are not meant to change finance but are a fun tool for enthusiasts to use on the Bitcoin network.

As of today, slightly more than 91,200 rands have been inscribed on Bitcoin, which is a proof of the initial success and the recent drop of this new token standard.

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The waning interest in the Runes protocol has further reduced the already falling revenue of Bitcoin miners. While roughly half of the transactions on the Bitcoin network are still Runes protocol-related, the number of transactions, which was 800,000 on April 23rd, has now fallen to below 350,000.

This, of course, has also had a negative impact on transaction fees. According to The Block, the 7-day moving average of transaction fees, which had risen to as high as $40, has now fallen below $10 and continues to decline. On the day after the halving, Bitcoin miners were paid a total of $80 million.

All-time Low Reached

Again according to The Block, Bitcoin miners’ revenue has fallen to $0.048 per terahash per second, an all-time low. However, it is worth noting that the value of the 3.125 BTC miners earn per block today is much higher than the 25 BTC they earned in 2013.

Giant Facilities On The Way…

Miners who bought thousands of machines before the halving and opened and will continue to open new facilities are continuing their struggle to outdo each other in this race. Many mining companies, from Bitfarms to RIOT to Cleanspark, will open new facilities with thousands of devices to be delivered in the 3rd quarter of 2024.

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Runes Maintains Dominance in Bitcoin Transactions

Runes has continued to dominate Bitcoin (BTC) transactions; however, Bitcoin miners’ revenue from this area has declined slightly since the record-breaking halving event. Since its launch on April 20, more than 2.38 million Runes have been transacted on the Bitcoin blockchain, representing 68% of all Bitcoin transactions during that period, according to a Dune Analytics dashboard shared by blockchain research firm Crypto Koryo.

Bitcoin’s Runes Craze Continues

Runes saw its biggest day on April 23 with over 750,000 transactions, but that number more than halved the following day to 312,000 transactions. These transactions contributed to approximately 70% of mining fees on halving day. Since then, the daily figure has fluctuated between 33% and 69%.

However, industry experts are divided on whether Runes can provide a sustainable revenue stream for Bitcoin miners. Additionally, there is already an inequality in the mining fees earned through Rune transactions.

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According to analysis by X user Clark Moody, almost all of Bitcoin’s top 10 most valuable blocks, in terms of U.S. dollar value at the time of mining, have been mined since the halving. The first block after the halving alone captured $2.6 million in fees and rewards, coming close to claiming the top spot. Other blocks have ranged in value from $1.3 to $2 million.

Unlike a previous $3 million overpayment in November, which remains the most valuable block, the transactions post-halving were deliberate efforts to secure valuable blockspace.

For instance, the miner of the first post-halving block was entitled to one of four “epic sats” – unique units of Bitcoin inscribed with specific data, which are exceptionally rare. This particular epic sat, being the first of its kind since the introduction of the Bitcoin Ordinals protocol, may also be the first to be sold.

In addition to epic sats, a new protocol called Runes was introduced to inscribe data on the Bitcoin blockchain. The first Rune was deployed for $430,000 as an airdrop to holders of certain Ordinals collections, as reported by Arkham, while others paid substantial sums to deploy their own collections.

Overall, 9 out of the top 10 most valuable blocks in Bitcoin’s history were mined shortly after the halving. Previously, the second most valuable block was a result of a $500,000 error by Paxos, but the fee was later returned by the mining pool involved.

The halving event not only reshaped Bitcoin’s reward structure but also sparked a surge in the value of mined blocks, highlighting the ongoing evolution and innovation within the cryptocurrency ecosystem.

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