Key Points
- Bitcoin mining difficulty has increased for the first time immediately following a halving event.
- The surge in transaction fees, largely driven by the hype surrounding the new fungible token standard for Bitcoin, Runes, has kept the hash rate near all-time highs.
Bitcoin’s mining difficulty increased by 2% on Wednesday, reaching a new all-time high. This is the first time such an increase has occurred in the first adjustment following a halving event.
The new record, at block height 840,672, reached a record of 88.1 trillion. This contrasts with previous halvings where the first adjustments saw decreases or no change.
Bitcoin Mining Difficulty and Halving Events
Bitcoin’s mining difficulty determines the complexity of mining a new block relative to the easiest it can ever be. The difficulty adjusts every 2016 blocks or roughly two weeks, to ensure a new block is found every 10 minutes.
Despite block subsidy rewards being reduced from 6.25 BTC to 3.125 BTC, miners continue to earn additional transaction fee rewards. In previous halvings, transaction fee rewards were insufficient to prevent a reduction in Bitcoin’s hash rate. However, this time, the hash rate has remained near all-time highs.
Impact of Runes on Transaction Fees
Much of the transaction fee activity can be attributed to the hype surrounding Runes, a new fungible token standard for Bitcoin introduced at the halving. This has led to a surge in speculative activity to mint new tokens.
Following the initial hype, average transaction fees have dropped considerably from a record high of $128.45 on the day of halving to around $5. However, Runes still account for around 42% of current Bitcoin transactions, with over 3 million Runes transactions processed since launch.
Despite the current transaction fee rewards windfall, the impact on hash rate as the hype subsides and Bitcoin’s price fluctuates remains to be seen. However, analysts expect 15% of miner revenues to come from transaction fees on a sustainable basis.
The increase in total hash rate and difficulty immediately following the halving may also speak to the maturity of the Bitcoin mining industry. The industry has evolved from home miners and small-scale operations to much larger scale, well-capitalized facilities. This has led to an expectation of further consolidation toward four leading public miners: CleanSpark, Marathon, Riot Platforms, and Cipher Mining.
Despite some negative headlines on miner revenue impact, some miners are still at all-time highs in terms of U.S. dollar revenue, providing solid balance sheets post-halving alongside relatively low debt. With Bitcoin’s fourth halving event now out of the way, attention is being drawn toward what happens next before the next one, estimated for April 2028.