Happy belated halving day! It’s safe to assume that most Bitcoiners have recovered from their hangovers following the halving parties by now. However, for miners, the hangover came with a delay. Following the surge in transaction fees and the period of elevated margins, we’ve now returned to reality, though the impact of the halving is still manageable. This week, we’ll closely examine the first 100 blocks after the halving, focusing on the following topics:
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Dissecting the halving
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ViaBTC hits the jackpot
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The first 100 blocks after the halving
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Transaction fees > block reward
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Rune transactions dominate the blocks
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Hashprice spikes
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Stay on your feet
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Dissecting the Halving
The halving is an event that occurs exactly every 210,000 blocks, roughly equating to four years. It signifies a programmed reduction in the subsidy awarded to miners for validating transactions and generating new blocks on the network. Over the weekend, at block height 840,000, the 4th out of a total of 32 halvings occurred. Bitcoin’s supply issuance dropped from 6.25 BTC to 3.125 per block, reducing daily production from 900 to 450 coins a day. Here are five facts about the halving that many don’t know:
The percentage of coins mined each halving cycle is the same as the block subsidy of that cycle. In the first cycle, the block subsidy was 50 BTC and 50% was mined; in the second cycle, 25 BTC and 25%, and so on. In this cycle, the subsidy is 3.125 BTC per block, and 3.125% of the 21 million BTC will be mined.
At the 4th halving, 93.75% of all Bitcoin was mined, which equals 19,687,500 BTC out of 21 million.
The production in this cycle experiences a reduction of 656,500 BTC, which accounts for 11.5% of the available supply for trade. Bitcoin’s inflation rate was lowered from about 1.7% to roughly 0.8%, which is below that of Gold (estimated between 1% and 1.5%).
The last Bitcoin is estimated to be mined around the year 2140. This event is known as “Bitcoin’s total supply cap.”
With each halving, transaction fees are growing in significance. Last year, we saw the transaction fees denominated in BTC surpass the subsidy a few times. This is likely to become more common in this halving cycle.
ViaBTC hits the Jackpot
ViaBTC hit the halving block at 840,000 with a whopping 37.626 BTC in transaction fees, resulting in over 40 BTC in total block rewards. This halving block recorded the highest fees seen since May 2021.
The First 100 Blocks in the New Halving Cycle
Although block 840,000 was impressive, it wasn’t the only one with high fees. In fact, within the first 100 blocks of the new halving cycle, there was an average of 11.19 BTC in fees. The second largest block (840,005), mined by AntPool, contained 29.82 BTC in transaction fees. In total, there were seven blocks with over 20 BTC in transaction fees and 52 blocks with over 10 BTC in fees. Remarkably, all of the first 100 blocks provided a higher fee reward than block subsidy.
Foundry USA Pool emerged as the big winner of the first 100 blocks, mining 31 of them, which contained a total of 328.71 BTC in fees. AntPool secured the runner-up position with 24 blocks, totaling 270.22 BTC in transaction fees. ViaBTC claimed the bronze medal by mining 14 blocks, accumulating a total of 175.73 BTC in fees.
Transaction Fees > Block Subsidy
With transaction fees spiking, there was a significant surge in the transaction fees as a percentage of the total block reward. This figure went as high as 139.8%, the highest level seen since 2017. However, unlike 2017, when higher fees were more sustained, this time we saw the percentage of transaction fees drop below 30% within a matter of a day.
Rune Transactions Dominate the Blocks
The spike in transaction fees was driven by the hype surrounding the Runes protocol. Launched at the halving (block 840,000), the Runes fungible token protocol dominated transactions in the first 100 blocks of the new cycle, reaching as high as 97.5% of the total block transactions and consistently staying above 55%.
Hashprice Spikes
After the halving, the surge in fees that caused the hashprice to skyrocket by 71%, reaching levels last observed in April 2022. However, shortly after peaking at $179/PH/Day, the hashprice experienced a sharp decline, currently hovering just below $75/PH/Day. While this marks the lowest hash price of 2024, it remains above the lowest level recorded in 2023, which was at $59/PH/Day.
Stay on Your Feet
As we’re only a few days into the new cycle, it’s too early to relax and enjoy the profits. Miners still need to brace themselves for a period of tight margins. Transaction fees must remain elevated and/or the BTC price needs to rise; otherwise, hashprice will likely hit new record lows.
If hashprice drops below $60/PH/Day for an extended period, it will force miners to operate at a loss. The consequences of compressed mining economics could be significant. We might see a wave of mergers and acquisitions, hashrate migrating as miners seek regions with cheaper energy sources, and technological innovations aimed at improving efficiency.
