The rise in transaction fees from Bitcoin Runes — a new protocol for issuing fungible tokens on the Bitcoin network — is offering a significant revenue boost for Bitcoin miners, according to Nazar Khan, the co-founder and CEO of TeraWulf.
Khan told Cointelegraph in an exclusive:
“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.”
As the rest of the Bitcoin block reward is fixed issuance, the transaction fees are the “wild card” for Bitcoin (BTC) miners, explained Khan.
Nazar Khan, interview with Cointelegraph. Source: Cointelegraph
The boost in transaction fees represents a significant financial lifeline for miners after the Bitcoin halving reduced block rewards from 6.25 BTC to 3.125 BTC.
Total Bitcoin transaction fees stood at 105 Bitcoin on April 25, down from its peak of 1,257 on April 20 — the day of the Bitcoin halving — according to CryptoQuant data. Yet, transaction fees remained higher compared to most of 2023.
Bitcoin miner fees (Total). Source: CryptoQuant
Related: ‘Real opportunity’ for Bitcoin Runes will come after first wave of investor hype
On average, transaction fees made up 30% of the Bitcoin block rewards since the halving, which is almost an additional Bitcoin for miners, on top of the existing block rewards, Khan said:
“If you think about the 30% [average transaction fee] where it’s been the last few days, that’s almost one BTC, on top of the 3.125 BTC that are being issued as block rewards. So it is very significant.”
Transaction fees comprised an average of 10% of Bitcoin block rewards in 2023. TeraWulf assumed an average post-halving Bitcoin production cost of $37,000 per BTC, assuming a 10% average transaction fee.
But with higher average transaction fees, TeraWulf’s Bitcoin production cost will likely fall lower, contributing to its profitability, according to Khan:
“To the extent that transaction fees are higher than that, we will recognize a…..
