Bernstein Report: Bitcoin Miners Cash in on ‘DeFi Summer’ Boom, Hitting 100 Million Dollars Post-Halving

Crypto News- Analysts at the research and brokerage firm Bernstein have remarked that Bitcoin is currently undergoing what they term a “DeFi summer” moment, as the emergence of the new Runes token standard has contributed to record-breaking daily miner rewards and transaction fees.

Bernstein Report: Bitcoin Miners Cash in on ‘DeFi Summer’ Boom, Hitting 100 Million Dollars Post-Halving

In a note addressed to clients on Monday, Gautam Chhugani and Mahika Sapra stated, “Bitcoin is no longer a ‘plain vanilla’ blockchain where nothing happens aside from holders simply ‘HODLing’ BTC. Bitcoin is experiencing a ‘DeFi summer’ akin to Ethereum’s in 2020, with multiple decentralized apps and tokens being launched on the blockchain, resulting in a surge of liquidity and transaction fees.”

Bitcoin’s Fourth Halving: Miners’ Block Rewards Halved

The fourth halving of Bitcoin occurred around 0:09 a.m. UTC on April 20 (8:09 p.m. ET on April 19), reducing miners’ block subsidy rewards from 6.25 BTC to 3.125 BTC.

Leading up to the halving, Bitcoin miners were earning approximately $60 to $70 million daily in subsidy and transaction fee rewards. However, on April 20, this figure spiked to $107.75 million, despite miners now receiving only half the subsidy reward per block, according to data from Blockchain.com. Glassnode data reveals that around 75% of this total ($80 million) came from transaction fees alone, marking record highs. Notably, transaction fees exceeded subsidy rewards for over 100 blocks.

Following block 840,000, which generated $2.4 million in fees — surpassing the approximate $200,000 worth of block subsidy reward — Bitcoin entered a record-breaking streak of 104 blocks where transaction fee rewards exceeded the subsidy, according to the Bitcoin explorer Mempool.

Jameson Lopp, co-founder at Casa, commented, “Bitcoin is on a record 100 block streak of transaction fees exceeding the block subsidy. Great to see the experiment playing out and proving the theory that fees can sustain the thermodynamic security budget!”

Apart from an apparent accidental $3 million overpayment last November, all of Bitcoin’s top 10 most valuable blocks have been mined since the halving.

The Impact of Runes: Surge in Transaction Fees driven by Speculative Activity

The surge in transaction fees can largely be attributed to the excitement surrounding Runes, a new fungible token standard for Bitcoin introduced at the halving. “This is driven by speculative activity to mint new tokens (mostly meme tokens) by retail traders,” noted the Bernstein analysts.

Developed by Ordinals creator Casey Rodarmor, the Runes protocol offers a more efficient solution for token creation on Bitcoin compared to BRC-20 tokens using Ordinals inscriptions.

Bitcoin Blockchain: Developer Activity and Token Protocols Attracting Retail Traders

Chhugani and Sapra explained, “The Bitcoin blockchain is witnessing developer activity and the launch of new token protocols, attracting retail traders to new tokens, resulting in a surge of fees on the Bitcoin network.”

Despite the initial hype, average transaction fees dropped significantly from a record high of $128.45 on the day of the halving to $34.80 on April 21. Average fees have now decreased to around $10, according to Mempool data.

While cautioning against extrapolating higher fees into the future, Bernstein’s analysts highlighted the untapped market potential of fungible tokens on Bitcoin. “DeFi tokens and other utility tokens on Ethereum exceed a value of ~$200 billion (compared to negligible market cap on Bitcoin now),” they stated. “Although Runes has debuted with meme tokens, over time, we could witness more utility-based fungible tokens on Bitcoin.”

Regarding the impact on miners moving forward, the analysts anticipate that 15% of miner revenues will derive from network transaction fees on a sustainable basis. However, they noted that speculative fervor on blockchains can persist for 6-18 months, suggesting that miners may continue to enjoy above-normal windfall for the time being.

Before the Bitcoin halving, miners were in an official bear market, as miner BTC rewards halve every four years. However, public Bitcoin miner stocks saw a surge ahead of the halving activity frenzy, with Riot Platforms and Marathon Digital closing up around 10%, and CleanSpark gaining 6% on the day.

Post-halving, Bitcoin miners’ total hash rate has remained steady at around 620 EH/s, reflecting the healthy bitcoin dollar price above $64,000 and the abnormal windfall from network transaction fees. Chhugani and Sapra concluded, “We expect the hash rate to see a decline only if bitcoin’s price action weakens from here, reaching new local lows with weaker ETF flows. We believe this scenario seems unlikely, and miners will likely continue to maintain their capacities post-halving.”