Source: Jishi News
Summary
Bitcoin successfully halved, and Runes were officially launched, bringing a new hot spot in the Bitcoin ecosystem. At 8:09 on April 20, 2024, BTC successfully completed the fourth halving at block height 840000, and the mining reward for each block of the Bitcoin network was halved from 6.25 BTC to 3.125 BTC. At the same time, Bitcoin Runes were officially launched at block height 840000. In less than two days (April 21), Runes brought about a rapid increase in Bitcoin chain fees, which is expected to create another hot spot in the Bitcoin ecosystem.Runes are an improvement on inscriptions, which facilitates the direct deployment of assets in Bitcoin UTXO. In our report "BRC-20: Innovation and Breakthrough from BTC Genes", we have analyzed and introduced the Ordinals protocol (inscriptions). This is a technical protocol that assigns a unique number to each satoshi (the smallest indivisible unit of Bitcoin). Inscriptions have brought about a phenomenal outbreak of the Bitcoin network ecosystem. Runes are an improvement on inscriptions, that is, issuing homogeneous tokens based on UTXO on the Bitcoin network. Figuratively speaking, it is an etching technology, just like the Chinese word "Runes". The token assets deployed by the Runes protocol intuitively record information on the Bitcoin chain: that is, written into the OP-RETURN field of Bitcoin UTXO (unspent output).
The launch of Rune has boosted the popularity of Bitcoin on-chain transactions, and transaction fees have grown rapidly. Since the launch at 8:09 on April 20, the Bitcoin on-chain fees generated by Rune activities accounted for 57.7% of the total fees on that day, while previously the fees on the Bitcoin chain were mainly traditional Bitcoin transfers. For block 840000, the fees generated were 37.626 BTC, which is 10 times more than the mining incentive (3.125 BTC)!
Following the inscription, the rune is expected to once again drive the rapid growth of Bitcoin chain fees, which is good for the computing power mining industry. For the Bitcoin mining industry, income comes from two parts: blockchain incentives (3.125 BTC per block after halving) and Bitcoin transfer fees. After the incentive is halved, the Bitcoin network transfer fee becomes a key variable. Whether the Bitcoin ecosystem can be active is related to the income elasticity of the mining industry (of course, another variable is the rise and fall of Bitcoin prices). We believe that Bitcoin runes are expected to bring another phenomenal development event of the Bitcoin ecosystem after the inscription, enhance the activity of the Bitcoin ecosystem in the Web3.0 system, and further promote the growth of chain fees, which is good for the mining industry.
Investment advice. We believe that the development of the Bitcoin Rune ecosystem is beneficial to the Bitcoin mining industry, including computing power mining stocks and mining machine stocks. Computing power mining stocks include: MARA, BTDR, BTBT, DGHI, IREN, RIOT, BITF, CLSK, HIVE, WULF, BTCM, ARBK, BTOG, MIGI; mining machine manufacturers: CAN.
Risk warning: Blockchain technology development is not as expected; regulatory policy uncertainty; Web3.0 business model implementation is not as expected
1. When Bitcoin was halved, Rune was launched, driving the popularity of on-chain transactions
Bitcoin successfully halved, and Runes were officially launched . At 8:09 on April 20, 2024, BTC successfully completed the fourth halving at block height 840000, and the mining reward for each block of the Bitcoin network was halved from 6.25 BTC to 3.125 BTC. At the same time, Bitcoin Runes were officially launched at block height 840000. In less than two days (April 21), Runes brought about a rapid increase in Bitcoin chain fees. The launch of Runes is expected to bring another hot spot to the Bitcoin ecosystem.
Runes are an improvement on inscriptions, which facilitates the direct deployment of assets in Bitcoin UTXO. In our report "BRC-20: Innovation and Breakthrough from BTC Genes", we have analyzed and introduced the Ordinals protocol (inscriptions). This is a technical protocol that assigns a unique number to each satoshi (the smallest indivisible unit of Bitcoin). Inscriptions have brought about a phenomenal outbreak of the Bitcoin network ecosystem. Runes are an improvement on inscriptions - issuing homogeneous tokens based on UTXO on the Bitcoin network. Figuratively speaking, it is an etching technology, just like the Chinese word "Runes". The token assets deployed by the Runes protocol intuitively record information on the Bitcoin chain: that is, written into the OP-RETURN field of Bitcoin UTXO (unspent output).
The launch of Rune has led to a rapid increase in Bitcoin chain fees. Since the launch at 8:09 on April 20, the Bitcoin chain fees generated by Rune activities accounted for 57.7% of the total fees on that day, while previously the Bitcoin chain fees were mainly traditional Bitcoin transfers. For block 840000, the fees generated were 37.626 BTC, which is 10 times more than the mining incentive (3.125 BTC)!
Following the inscription, the rune is expected to once again drive the rapid growth of Bitcoin chain fees, which is good for the computing power mining industry. For the Bitcoin mining industry, income comes from blockchain incentives (3.125BTC per block after halving) and Bitcoin transfer fees. After the incentive is halved, the Bitcoin network transfer fee becomes a key variable. Whether the Bitcoin ecosystem can be active is related to the income elasticity of the mining industry (of course, another variable is the rise and fall of Bitcoin prices). We believe that Bitcoin runes are expected to bring another phenomenal development event of the Bitcoin ecosystem after the inscription, enhance the activity of the Bitcoin ecosystem in the Web3.0 system, and further promote the growth of chain fees, which is good for the mining industry.
2. Investment advice : Pay attention to cryptocurrency-related sectors
We believe that the development of the Bitcoin Rune ecosystem is beneficial to the Bitcoin mining industry, including computing power mining stocks and mining machine stocks.
Computing power mining stocks: MARA, BTDR, BTBT, DGHI, IREN, RIOT, BITF, CLSK, HIVE, WULF, BTCM, ARBK, BTOG, MIGI;
Mining machine manufacturer: CAN.
3. Risk Warning
Blockchain technology development is not as good as expected: The blockchain-related technologies and projects underlying Bitcoin are in the early stages of development, and there is a risk that technology development will not be as good as expected.
Uncertainty of regulatory policies: The actual operation of blockchain and Web3.0 projects involves a number of financial, network and other regulatory policies. Currently, the regulatory policies of various countries are still in the research and exploration stage, and there is no mature regulatory model, so the industry faces the risk of uncertainty in regulatory policies.
Web3.0 business model implementation is not as good as expected: Web3.0-related infrastructure and projects are in the early stages of development, and there is a risk that the business model implementation will not be as good as expected.
This article is excerpted from the report "Guosheng Blockchain | Bitcoin Rune Riding the Halving, Mining Industry Ushers in Good News" released by Guosheng Securities Research Institute on April 21, 2024. For details, please see the relevant report.
