In a recent downturn for the Bitcoin blockchain, the Runes protocol has experienced an 88% fall in transaction counts from its monthly high.
Initially embedded into the Bitcoin network in April 2023, Runes has seen a significant decline in transaction activity and Bitcoin miner revenue. Data from Dune Analytics highlights that from June 9th to June 15th, transactions peaked at 331,040 on average but fell sharply to just 37,820 between June 22nd and June 28th.
Impact on Bitcoin miners’ earnings
The dip in transactions has had a direct impact on Bitcoin miners’ earnings. Over the past six days, earnings have plummeted to below two, starkly contrasting the 844 Bitcoins recorded on April 24th.
Despite these challenges, Bitcoin miners have remained profitable, aided partly by a 52% reduction in the Bitcoin hash price since June 20th, as Luxor Technology’s Hashrate Index reported. Although this represents a near-all-time low, the overall profitability of mining activities has not yet entered a deficit.
Runes: An eco-friendly alternative?
Developers behind the Runes protocol continue to advocate for its benefits over similar platforms on the Bitcoin network, such as Bitcoin Ordinals inscriptions. They highlight Runes’s eco-friendly nature as a significant advantage, positioning it as a sustainable alternative. Runes allows for the creation of fungible tokens, akin to ERC-20 tokens on the Ethereum blockchain, providing a new utility on the Bitcoin network that extends beyond simple peer-to-peer transactions.
Decline across other Bitcoin protocols
In addition to Runes, other protocols such as Ordinals inscriptions and BRC-20 have also seen a decrease in their transaction counts and mining fees. These reductions became particularly noticeable after the Bitcoin network underwent its halving event on April 20th, coinciding with the launch of Runes.
This halving event cut the block subsidy by 50%, prompting miners to need alternative revenue streams. Although these protocols initially helped to buffer the reduced block subsidy, their performance has weakened alongside fluctuating trading volumes.
The Runes protocol and other similar Bitcoin-based innovations have faced significant challenges recently. While they offer new revenue streams and functionalities within the Bitcoin ecosystem, their sustainability and long-term impact on miner profitability remain to be seen. As the market continues to adapt to the post-halving environment, the resilience and adaptability of these protocols will likely be critical factors in their ongoing relevance and success in the cryptocurrency landscape.
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