The fourth bitcoin halving occurred on Friday at a little after 8:09 p.m. Eastern, dropping the issuance rate of new bitcoin to 3.125 roughly every ten minutes.
Despite the notable event, it's unclear whether it will lead to a sharp bitcoin price rise as it has in the past.
The bitcoin halving may best be viewed as a symbolic event more than anything else, as it illustrates bitcoin's value proposition on the backdrop of relatively high inflation rates.
It's likely that miners may be affected more than anyone else due to the loss of revenue, though some miners are exploring other avenues to make up for that shortfall.
The highly-anticipated fourth iteration of the bitcoin halving occurred a little after 8:09 p.m. Eastern on Friday. Bitcoin traded flat in the immediate aftermath of the halving, holding steady around $63,000.
After the halving, the rate of issuance of new bitcoin as well as the rewards for successful bitcoin miners are cut in half. There can only be 21 million bitcoin, and fewer new tokens entering circulation could impact bitcoin prices. That's why the halving is watched closely by miners and investors alike.
After today's halving, the rate of new bitcoin created roughly every 10 minutes is 3.125. These halving events take place after every 210,000 blocks are validated or roughly every four years and were baked into the network's design when it was originally launched in January 2009.
After the halving, the block reward or subsidy associated with validating each new block of transactions on the Bitcoin network is cut in half. The block subsidy is the newly-created bitcoin that is included in the block as a reward to the associated miner. So in effect, the block subsidy for successful miners is now 3.125 bitcoin.
In addition to the subsidy, miners also collect any fees associated with the transactions in the block.
The halving block was mined by ViaBTC, and it was the 840,000th block mined on the Bitcoin network. However, it is interesting to note that the successful miner took home a little over 40 bitcoin or equivalent of more than $2.6 million in block subsidy and fees as their reward, according to data from mempool.space.
This fee is much higher than the a little over 7 bitcoin, worth a little more than $450,000 were earned in total fees for successful validation of the blocks that immediately came before the halving block. The reason for this spike is unclear, but perhaps it was people willing to pay higher fees to get their transactions among the 3,050 included in the halving block.
What Happens Next?
In the past, halvings have led to new all-time highs for the bitcoin price in the months following the events. However, this time has been different, as the bitcoin price has already reached a new all-time in the months prior to the halving.
Much of the recent rally was driven by the spot bitcoin exchange-traded funds (ETF), perhaps an indication the demand created by that market may have a greater impact on bitcoin prices than halving events.
According to Kraken Head of Strategy Thomas Perfumo, there is a degree of additional symbolism associated with this halving in terms of the illustration of bitcoin's apolitical, unwavering monetary policy at a time when many people around the world are having questions about their own currencies.
"At a time when you have people who are looking at their conventional currencies—inflation, interest rates, and the economic environment they live in—they see this alternative form of currency, bitcoin," Perfumo told Bloomberg.
However, analysts at JPMorgan and Deutsche Bank said that the impact of this halving was mostly baked into the current bitcoin prices and there isn't likely to be a large upward movement in the price in its aftermath.
According to these reports, the near-term effects of the halving may be limited to the bitcoin mining sector, where consolidation could occur as overall hashrate declines due to decreased profitability.
That said, there are also indications that miners could have avenues for increased revenue even if the halving does not lead to a price boom. This increased revenue would come via increased aggregate fees from transactions spearheaded by recent developments such as Ordinals and layer-two networks.
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After the halving, the rate of issuance of new bitcoin as well as the rewards for successful bitcoin miners
bitcoin miners
Bitcoin mining is an energy-intensive process involving mining devices and software that compete to solve a cryptographic problem. The Bitcoin mining process also confirms transactions on the cryptocurrency's network. As an incentive to participate in the process, bitcoin is rewarded to those that win the competition.
are cut in half. There can only be 21 million bitcoin, and fewer new tokens entering circulation could impact bitcoin prices. That's why the halving is watched closely by miners and investors alike.
For instance, after the first halving, the reward for bitcoin mining dropped to 25 BTC per block. The last halving should occur in 2140. At that point, there will be 21 million BTC in circulation and no more coins will be created. From there, miners will just be paid with transaction fees.
“Historically, bitcoin has experienced notable price increases in the six months following each halving event. In fact, bitcoin reached new all-time highs in each four-year period between the previous halving events,” Binance CEO Richard Teng told The Block.
A Bitcoin halving event occurs when the reward for mining Bitcoin transactions is cut in half. Halvings reduce the rate at which new coins are created and thus lower the available amount of new supply. Bitcoin last halved on April 19, 2024, resulting in a block reward of 3.125 BTC.
It means that the miners' reward will fall by half following the approval of new blocks added to the blockchain. This will reduce the frequency of new bitcoin injected into the system as the total amount of mined bitcoin edges closer to the maximum threshold of 21 million circulating units.
Of course, the halving has some effects on the Bitcoin ecosystem. For example, the reduced reward for miners means that Bitcoin's price will need to rise over a longer time frame for miners to continue mining profitably.
When its supply is reduced through halving, and if the demand stays constant or increases, we often see a ripple effect on the prices of other cryptocurrencies.
Evidence of this can be found when analyzing Bitcoin's performance in the year halvings occur. On average, Bitcoin has increased roughly 125% in halving years. However, the year after a halving tends to produce the best gains.
Bitcoin, it found, is likely to hit an average peak price of $87,875 in 2024, with some experts predicting it will climb as high as $200,000. On the flip side, the average lowest price Bitcoin could hit by the end of 2024, is seen as $35,734, the report said, with some predicting it will fall as low as $20,000.
Generally, halving seems to have triggered price increases in the past. According to research by crypto tax consultancy CoinLedger in the six months following the last two halvings, the value of BTC increased by 51% and 83% respectively.
“Miners need their revenues to be more than their costs, like any business,” Malekan says. “What is likely to happen after the halving is that some miners will no longer be profitable, and they will stop mining.”
We predict that Bitcoin will hold an average price of $60,000 in 2024, thanks to the Halving event, and settle more in 2025 with an average of $65,000. In 2026, we see Bitcoin trading as high as $90,000 by the end of the year. By 2030, we predict that Bitcoin could reach a high of $160,000.
Bitcoin halving is considered bullish because each event reduces the rate at which future bitcoins are created. This then boosts the scarcity and value of existing bitcoins. But a positive effect isn't guaranteed.
Who Owns the Most Bitcoins? Satoshi Nakamoto, the pseudonymous creator of Bitcoin, is believed to own the most bitcoins, with estimates suggesting over 1 million BTC mined in the early days of the network.
If Bitcoin's price rises post-halving, Ethereum and other cryptocurrencies will likely experience price increases as investors diversify their portfolios.” Evans believes this may not be the wholly positive news many think it is.
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