On a pivotal day for the Bitcoin ($BTC) ecosystem, 20 April 2024, miners achieved a record-breaking total earning of $107.7 million, a new high for daily revenues on the Bitcoin network.
This event occurred as the community came together to mine the 840,000th block, coinciding with the fourth halving event, which cut the block reward in half.
Participants contributed significantly to this surge, with a remarkable $2.4 million paid in fees alone to ensure their transactions were included in this historic block.
The average fee per transaction spiked to just under $800, underscoring the heightened competition for block space.
The halving event effectively reduced the Bitcoin block reward from 6.25 $BTC to 3.125 $BTC, exacerbating competition among transactions on 20 April.
On this day, Bitcoin not only saw record-breaking miner earnings but also dramatically outperformed Ethereum ($ETH) in terms of transaction fees, generating a whopping $78.3 million.
This figure was 24 times higher than the fees on the Ethereum network, which totaled just $3.2 million. The substantial difference was primarily due to the increased demand for Bitcoin transactions, as users rushed to be part of the historic halving block.
The launch of Casey Rodarmor’s Runes protocol on the same day further fueled this demand, adding to the unprecedented level of activity on the network.
Transaction fees plummet to single digits
In a dramatic shift following the hype of Bitcoin’s fourth halving, transaction fees on the Bitcoin network plummeted from an all-time high to single-digit figures almost overnight.
During the halving event, the average transaction fee surged to an unprecedented $128 as users competed to have their transactions included in the historic 840,000th block.
However, by the following day, this figure dramatically decreased to between $8 and $10 for medium-priority transactions, according to real-time data tracked by mempool.space.
This significant reduction in transaction fees is attributed to several factors. Primarily, the spike was driven by the temporary frenzy surrounding the halving event itself, where users were willing to pay premium fees to be part of a milestone in Bitcoin’s history.
Moreover, the decline in fees can also be linked to the normalisation of transaction demand post-halving. Once the special block was mined, the urgency to secure a spot in the blockchain receded, leading to a decrease in demand for transaction processing and, consequently, lower fees.
This cycle of hype followed by normalisation is typical around major events in the cryptocurrency world, reflecting the highly speculative nature of the market.
Positive effect on L2 projects
The halving event also cast a spotlight on Layer 2 (L2) projects associated with Bitcoin, which are designed to enhance the scalability and efficiency of the main blockchain.
In the days following the halving, tokens associated with these Layer 2 solutions saw significant price increases.
For instance, Stacks ($STX), which aims to bring smart contracts and decentralised applications to Bitcoin, saw its price increase by nearly 20%.
Similarly, tokens like Elastos’ $ELA and SatoshiVM’s $SAVM also experienced notable gains.
This market behaviour reflected a growing recognition of the value that these projects bring to the Bitcoin ecosystem, especially in terms of enhancing its functionality and scalability.
Bitcoin surges after halving
In the aftermath of the halving, Bitcoin’s market price also showed resilience and modest growth, climbing nearly 2% to trade at around $66,266.
This post-halving increase reflects a more mature market response compared to previous halvings, which often saw more dramatic price movements.
Analysts suggested that as Bitcoin becomes more integrated into mainstream financial systems, its price response to halvings may continue to stabilise, offering a less speculative and more predictable investment landscape.
At the time of press, the top coin was changing hands for $66,056, up by over 1% in the last 24 hours and trading in the green on its charts.
Looking ahead, the cryptocurrency community is closely monitoring how these changes affect the broader ecosystem, including miner economics and the viability of Bitcoin as a transactional currency.
As the market adjusts to the new supply dynamics post-halving, the role of innovations like Runes and the performance of Layer 2 projects will be crucial in shaping the future trajectory of Bitcoin and its underlying technology.
