Runes, Bitcoin's new non-fungible feature, attracted attention and initially eased the profits of miners, but its usage quickly plummeted.
At the time of publication, the price of BTC was above $60,150.
(Unsplash/Shubham's Web3)
Posted on April 30, 2024 at 6:19 PM ET.
Shortly after Bitcoin miners' profits surged due to transaction fees from the launch of the Rune alternative token during the halving, miner profitability levels fell to an all-time low.
It measures the expected mining revenue from a defined amount of hash rate, or computational power allocated to mining Bitcoin, at least as defined by “hash price”.
On April 20th, the day after the halving, Hashprice reached a two-year high of 0.0028 BTC or $182, but at the time of the announcement it had fallen nearly 72% to 0.000785 BTC per day in BTC terms. This means that a miner can expect to earn around 0.000785 BTC with his 1 PH/s hashing power, or $47 per day. This is the lowest amount ever, according to data from. hash rate index.
Small miners are in trouble, but large miners are in an advantageous position
The impact of mining on profitability is uneven. Small-scale miners are in a difficult environment because they perform mining operations that are inefficient and not resource-intensive when scaled up.
“Since subscale miners are no longer making money mining, we expect them to go offline and network difficulties to adjust accordingly,” said Asher Genoot, CEO of Bitcoin mining company Hut 8. said in an email to Unchained. “This post-halving situation highlights the importance of securing low-cost energy while managing an efficient fleet.”
Read more: Bitcoin miners diversify revenue streams as halving approaches
Genuto said scaled-up mining operators expected hash prices to fall after the halving and had been preparing for several months. as a result, “[they] Genuto said the company is well-positioned not only to weather this volatility, but also to take advantage of growth opportunities as distressed assets are sold at discounted valuations.
existence of runes
The decline in hash prices is due to a decline in interest in runes collected through a decline in rune transactions. dune dashboard By CoinShares Analyst Matt Kimmel.
“Lune, BTC DeFi, Ordinal, etc. are all welcome innovations in the long run. No one knows which will have the staying power, but for miners to be successful they will need more activity and on-boarding.” We need on-chain fee generation,” Quinn Thompson, chief investment officer at crypto hedge fund Wrecker Capital, said in a private message to Unchained.
At block height number 840,003 (3 blocks after the Bitcoin halving), Runes dominated Bitcoin, accounting for 97.3% of all transactions, increasing miners' revenue in the process.
The rate of Rune transactions on Bitcoin has fluctuated, but Rune's on-chain activity has decreased in recent blocks.
“The problem is that spikes in activity usually indicate localized peaks, as they are targeted at speculative activity peaks rather than underlying real-world use cases.” said Mr. Thompson. “This is a problem and why I question how legitimate these things are.”
Still, sometimes runes make up the majority of transactions within a single block. For example, in block 841,547, Rune was responsible for his 87.4% of all activities.
“Time will tell, but it is unclear at this point whether BTC activity is sustainable enough to support the necessary income for miners,” Thompson said.
