Introduction

The Bitcoin halving was supposed to be a day of celebration and the end to Bitcoin’s woes of the prior four years. On that late Friday night (and in technical, computer geek UTC time, a party-perfect date of 4/20), Bitcoin turned the page to its fifth epoch. Fans cheered the end of its 28-month-long bear market and waved goodbye to the fourth epoch’s 6.25 BTC block reward, welcoming a halved inflation rate of just 3.125 BTC per block. They hoped that the disinflationary shock might boost the price, and usher in a suite of upgrades to Bitcoin’s functionality that would fund a wellspring for its security budget. Unfortunately, reality has failed to live up to their expectations. The price of bitcoin hasn’t rallied since the halving, nor has the halving increased Bitcoin’s security budget.

Bitcoin halving

A cornucopia of new activity was supposed to arise from a suite of Bitcoin-branded protocols at the halving. This was to be based on Ordinals, a software program that pretends to track satoshis, the smallest denomination of 1 BTC. Ordinals were supposed to empower active secondary markets for numismatics (collectible markets for unique satoshis or ‘rare sats’) and enable permanent data storage and on-chain software with inscriptions. Most importantly, they were designed to underpin Runes, a brand new fungible token protocol for trading ERC20-like tokens and meme coins on Bitcoin.

All of those fantastic debuts have lifted Bitcoin’s USD-denominated miner’s revenue — the definitive measure of the blockchain’s security budget against real-world adversaries — exactly nowhere. At block 840,000, Casey Rodarmor’s highly anticipated Runes protocol launched to fanfare and prompted the largest-ever amount of money paid for a single block in Bitcoin’s history: 74 BTC ($4.7 million). A single satoshi, the so-called ‘epic sat’ number 1,968,750,000,000,000, resold at auction for $2.1 million. It was a promising start. Just imagine, fans of Rodarmor thought: a single satoshi (commonly valued at 1/100 millionth of bitcoin’s current price, $62,000) reselling for millions of dollars.

However, there’s no free lunch. Only a small amount of speculative new money actually entered the secondary markets for these collectible satoshis. As a result, Ordinals, Inscriptions, Rare Sats, and Runes traders could no longer afford to continually overpay miners for on-chain transaction fees. Fees from this nascent community — heralded as the leading source of revenue for Bitcoin’s security budget post-halving — have evaporated. Runes, like so many Bitcoin-branded projects for creating altcoins before it, failed to sustain its hype for even two days after the halving. In all, bitcoin miners’ revenue is down 75% since the halving. Worse, Bitcoin’s security budget (approximately $30 million daily) is now lower than miners’ median revenue this year (approximately $50 million daily).

The chart of Bitcoin’s security budget says it all. In the run-up to the halving, excitement swelled about a supposed new era for Bitcoin. Fans cheered the rising transaction fees, which spiked on the day of the halving. Traders spent millions to buy satoshis commonly valued at 1/100 millionth of 1 BTC and gladly overpaid miners with obscene transaction fees. Less than one month later, all of their bids have made no difference to Bitcoin’s ongoing security budget. Runes failed its fans. As of today, neither Ordinals, Inscriptions, Numismatics, or any other protocol for trading satoshis have lifted Bitcoin’s security budget above its prior average.

Bitcoin-Branded Protocols

Ah, Bitcoin-branded protocols, those innovative (and sometimes puzzling) endeavors that get the crypto community buzzing with excitement. From "Ordinals" to that quirky "Runes" protocol, these inventions were supposed to elevate Bitcoin's status, bringing new functionalities and a whole lot of pizzazz. But like that overpriced gadget you regret buying, these protocols failed to deliver on their lofty promises. So let's dive into the underwhelming saga of Bitcoin's latest misadventures.

Ordinals and Rare Sats

Ordinals, ah yes, the software program that boldly claimed to track satoshis—the smallest denomination of Bitcoin. For the uninitiated, think of Ordinals as a celebrity stalker but for Bitcoin. It was supposed to transform satoshis into unique collectibles, cleverly dubbed 'Rare Sats.' Imagine owning the Bitcoin equivalent of a rare Pokémon card; you get the drift. Alongside came "Inscriptions," a digital graffiti feature that enabled permanent data storage and on-chain software. Enthusiasts thought this was the golden ticket to a flourishing numismatics market. Alas, the hype was inversely proportional to the lasting impact. The anticipated flood of new money and activity? It was more of a trickle, like a leaky faucet that never really got fixed.

Runes Protocol

Then entered the "Runes" protocol with a fanfare rivaling a major league baseball game (minus the peanuts and Cracker Jacks). Designed to support ERC20-like tokens and meme coins on Bitcoin, Runes had everyone on the edge of their seats. Would this new protocol sustain the momentum lit by Ordinals? Spoiler alert: It barely had the shelf life of an avocado. The initial excitement evaporated faster than you could say "to the moon." Revenue metrics were sparkling at first, hitting an all-time high with a single block garnering 74 BTC ($4.7 million). And don't forget that one satoshi, the 'epic sat,' which resold at auction for a staggering $2.1 million. Impressive, right? Fast forward a smidge, and it became obvious these were just fireworks—bright for a moment, but then quickly fading to dark.

Impact on Bitcoin’s Security Budget

USD-Denominated Miner's Revenue

So, what’s the scoop on Bitcoin's security budget post-halving? Not great, Bob. The halving event, which sliced the BTC block reward in half to 3.125 BTC, was expected to send Bitcoin's security budget soaring like one of Elon Musk’s rockets. Sadly, the USD-denominated miner's revenue didn’t follow suit. Despite the much-hyped protocols and the crazy-yet-brief resale prices for satoshis, the ultimate revenue pot for miners hasn’t quite ballooned. In fact, instead of lifting Bitcoin’s security budget, these so-called revolutionary protocols have done little more than generate a series of expensive but fleeting transactions.

Speculative Market Dynamics

If we peek into the speculative market dynamics, the numbers tell a tale of initial excitement quickly fizzling into a lukewarm bath of disappointment. Initially, there was a rush, a gold rush if you will, where traders were ready to pay exorbitant fees to nab these 'Rare Sats' and participate in the Ordinals and Inscriptions frenzy. It was like Black Friday for Bitcoin—minus the trampling but with plenty of overbidding. But it turns out, there're only so many people willing to overpay for what essentially amounts to digital trinkets. The excitement barely lasted beyond a couple of days, leading to a precipitous drop in transaction fees. The speculative fervor that was supposed to sustain Bitcoin miners and enhance its security budget turned out to be as sturdy as a house of cards.

Miners' Revenue Post-Halving

The miners' revenue after the halving didn’t just fail to meet expectations; it practically fell off a cliff. We're talking about a 75% decrease in revenue. In numerical terms, Bitcoin's security budget, previously hovering around $50 million daily, has now dwindled to approximately $30 million daily. It’s like expecting a birthday cake and getting a muffin instead. The buzz created by Ordinals, Rare Sats, Inscriptions, and Runes did manage to temporarily inflate transaction fees. But as the euphoria subsided (and the music stopped), miners found themselves facing the harsh reality that these new protocols weren’t the cash cows they’d been painted to be.

Summary

Ah, the eternal optimists in the Bitcoin community had their hopes as high as a kite in a tornado when the latest Bitcoin halving came around. With dreams of a bullish market and an armored security budget, enthusiasts toasted to a supposed new dawn. Enter stage left: a suite of protocols like Ordinals and Runes, which were expected to bring in a treasure trove of new activity and revenue. But, spoiler alert—reality didn’t quite meet these sky-high expectations.

Ordinals, for those not in the know, is a software that lovingly tracks satoshis, akin to keeping tabs on every rice grain in a storage silo. It was said that this would open the floodgates for collectibles markets revolving around ‘rare sats’ and also support Runes, a new protocol for trading tokens and meme coins on Bitcoin. But instead of a bountiful harvest, these endeavors proved to be more of a disappointing crop failure. The big kicker? Bitcoin’s security budget didn't get the boost it so dearly needed. Instead of miners gleefully rolling in revenue from transaction fees, they’re scrounging around in post-halving dry lands.

Related News

On the fateful day of Bitcoin block 840,000, Casey Rodarmor's highly anticipated Runes protocol made a grand entrance. Despite a flashy start that saw a record-setting block award and a single satoshi auctioning off for a cool $2.1 million, the fanfare quickly fizzled out. People who were ready to part with their hard-earned dollars on these 'rare sats' soon realized the same cardinal rule of investing: there's no such thing as a free lunch. A minor influx of speculative capital just wasn’t enough to keep the whole enterprise afloat.

As the buzz around these protocols evaporated quicker than a puddle in the Sahara, miners saw their revenue divebomb by 75% post-halving. Adding salt to the wound, Bitcoin's security budget shrunk to below $30 million daily—an ominous drop from the median revenue that miners have been pulling in. It turns out the supposed parade of protocols like Numismatics and Inscriptions were simply not up to the task of shoring up Bitcoin’s fortress of security.

Fans of Runes were left with the blockchain equivalent of a pie in the face. Their high hopes of secondary markets overflowing with activity like Times Square on New Year’s Eve were dashed. This enthusiasm did initially spike transaction fees and miner profits, but the windfall was short-lived. Less than a month after all the hoopla, it was clear that Bitcoin’s security budget had reverted to its usual ho-hum state.

So, where does this leave us? The glittering debut of these protocols has proven to be more hype than help. Neither Ordinals, Inscriptions, Numismatics, nor Runes have managed to buoy Bitcoin’s security budget above its previous averages. Despite their illustrious promises, the reality is Bitcoin's security woes remain unsolved, and the miners are still hunting for their pot of gold at the end of a very elusive rainbow.