Bitcoin miners are experiencing a significant revenue surge due to the rise in transaction fees from Bitcoin Runes, a novel protocol for issuing fungible tokens on the Bitcoin network, as stated by Nazar Khan, the co-founder and CEO of TeraWulf.
Khan emphasized the impact of Runes on transaction fees, noting, “Runes significantly increased the transaction fees, so if anything, there was an increase in the hash price in the first 24-30 hours [after halving].
Since then, we’ve seen transaction fees come down, but compared to the average fees in 2023, they’re still pretty high.”
Given that the remainder of the Bitcoin block reward is a fixed issuance, transaction fees serve as the variable element for Bitcoin miners, Khan explained.
This surge in transaction fees provides a crucial financial boost for miners following the Bitcoin halving, which reduced block rewards from 6.25 BTC to 3.125 BTC.
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Although total Bitcoin transaction fees decreased from their peak of 1,257 on April 20 to 105 BTC on April 25, they remained notably higher compared to most of 2023, according to CryptoQuant data.
On average, transaction fees constituted 30% of Bitcoin block rewards post-halving, translating to almost an additional Bitcoin for miners on top of the existing block rewards, Khan revealed.
In contrast, transaction fees comprised only 10% of Bitcoin block rewards in 2023.
TeraWulf estimated a post-halving Bitcoin production cost of $37,000 per BTC, assuming a 10% average transaction fee.
However, with the current higher average transaction fees, TeraWulf anticipates a further reduction in Bitcoin production cost, thereby enhancing its profitability, Khan suggested.
Despite the halving of block rewards, TeraWulf remains positioned for expansion as the eighth-largest Bitcoin mining firm, boasting a market capitalization exceeding $750 million, according to Companies Market Cap.
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