Analysts at research and brokerage firm Bernstein said Bitcoin 
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is experiencing a “DeFi summer” moment as the new Runes token standard helps spark record daily miner rewards and transaction fees.
“Bitcoin is no longer a ‘plain vanilla’ blockchain anymore, where nothing happens other than holders simply ‘HODL’ BTC,” Gautam Chhugani and Mahika Sapra wrote in a note to clients on Monday. “Bitcoin is experiencing a ‘Defi summer’ like moment that Ethereum did back in 2020, where multiple decentralized apps and tokens were launched on the Ethereum blockchain, leading to splurge of liquidity and transaction fees.”
Bitcoin’s fourth halving occurred at around 0:09 a.m. UTC on April 20 (8:09 p.m. ET on April 19), reducing miners’ block subsidy rewards from 6.25 BTC to 3.125 BTC.
Bitcoin miners had been earning a total of around $60 to $70 million in daily subsidy and transaction fee rewards leading up to the halving. However, this spiked to $107.75 million on April 20, despite miners earning half the subsidy reward per block, according to Blockchain.com data. Around 75% of this ($80 million) came from transaction fees alone, per Glassnode data — both record highs.
Miners’ daily revenue. Image: Blockchain.com.
Transaction fees exceed subsidy rewards for over 100 blocks
After halving block 840,000 generated $2.4 million in fees — far exceeding the approximate $200,000 worth of block subsidy reward — bitcoin went on a record 104-block run of transaction fee rewards being higher than the subsidy, according to the Bitcoin explorer Mempool.
“Bitcoin is on a record 100 block streak of transaction fees exceeding the block subsidy. Great to see the experiment playing out and proving the theory that fees can sustain the thermodynamic security budget!,” Jameson Lopp, co-founder at Casa, said.
Bitcoin mining rewards. Image: Bernstein.
In fact, aside from an apparent accidental $3 million overpayment last November, all of Bitcoin’s top 10 most valuable blocks have been mined since the halving.
Runes hype sparks activity surge
Much of the transaction fee activity can be attributed to the hype surrounding Runes — a new fungible token standard for Bitcoin that was launched at the halving. “This is driven by speculative activity to mint new tokens (mostly meme tokens) by retail traders,” the Bernstein analysts said.
The Runes protocol was developed by Ordinals creator Casey Rodarmor, offering a more efficient solution for “etching” (creating) tokens on Bitcoin compared to BRC-20 tokens that use Ordinals inscriptions.
“The Bitcoin blockchain is seeing developer activity and launch of new token protocols, attracting retail traders to new tokens, leading to a ‘fees’ splurge on the Bitcoin network,” Chhugani and Sapra explained. “The process of minting the token requires the user/trader to pay fees to include their transaction in the Bitcoin block space, and the excess demand for token minting leads to more competition and thus, escalation of Bitcoin transaction fees.”
According to Runes explorer Unisat, over 7,000 Runes tokens have been minted so far, with “SATOSHI•NAKAMOTO” being the most held.
Transaction fees drop as Runes hype subsides
Despite the initial hype, average transaction fees dropped considerably from a record high of $128.45 on the day of halving to $34.80 on April 21, per YCharts data, with total daily miner revenue falling to around $51 million. Average fees are now back down to around $10, according to Mempool data.
Bernstein’s analysts warned that investors should not extrapolate higher fees into the future but noted the untapped market potential of fungible tokens on Bitcoin. “DeFi tokens and other utility tokens on Ethereum exceed more ~$200 billion in value (vs negligible market cap on Bitcoin now),” Chhugani and Sapra said. “Although Runes has launched with meme tokens, overtime, we could see more utility-based fungible tokens on Bitcoin.”
In terms of the impact on miners going forward, “we expect 15% of miner revenues to be network transaction fees, on a sustainable basis,” the analysts added. “However, speculative fervor on blockchains can last over 6-18 months, thus we would not be surprised, if miners continue to enjoy above normal windfall for now.”
Bitcoin miner stocks jump as hash rate holds steady
“Miners were in an official bear market before the Bitcoin halving,” the analysts said. “This is because miner BTC rewards are cut by half every 4 years. Thus, investors don’t feel great about mining stocks pre-halving, reflected in deep underperformance of Bitcoin miners vs. bitcoin year-to-date.”
However, public Bitcoin miner stocks jumped ahead of the halving activity frenzy on Friday, with Riot Platforms and Marathon Digital closing up around 10% and rival CleanSpark gaining 6% on the day.
Bitcoin miners’ total hash rate has also remained steady post-halving at around 620 EH/s. “This is not surprising, given the healthy bitcoin dollar price above $64,000 and abnormal windfall on network transaction fees,” Chhugani and Sapra said. “We expect hash rate to see a decline, only if bitcoin’s price action becomes weak from here, reaching new local lows with weaker ETF flows. We believe this scenario seems unlikely and miners will continue to maintain their capacities post-halving.”
Bitcoin is currently trading for $66,106, according to The Block’s price page — up 1.8% over the last 24 hours.
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