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What Can We Expect After The April 2024 Bitcoin Halving?

The halving is a network event typical of a few proof-of-work (PoW) blockchains.
April 16, 2024

The halving is a network event typical of a few proof-of-work (PoW) blockchains. It is a deflationary measure that ensures the value of PoW assets, like Bitcoin (BTC), remains healthy by controlling the volume entering circulation. The halving is typically anticipated in the crypto industry and is an essential part of the sector because it indirectly affects many other major altcoins. Generally, it might be impossible to answer the question “What is Bitcoin?” without discussing the halving.

The event happens every 210,000 blocks, which takes about four years. According to Eric Huffman, the Genesis Block started it all, with each subsequent block linking to it, making an unbreakable chain. Today, over 820,000 Bitcoin blocks have been mined. The halving also cuts Bitcoin miner rewards in half to control circulation. So far, there have been three halving events since Bitcoin’s first block was mined in January 2009. The first halving in 2012 cut block rewards from 50 BTC per block to 25 BTC. While the second halving in 2016 crashed rewards from 25 BTC to 12.5 BTC, the 2020 halving further reduced it to 6.5 BTC. With less than two weeks until the network’s fourth halving, expected on April 19 or 20, block rewards are set to crash to 3.125 BTC.

According to the Bitcoin whitepaper published by pseudonymous creator Satoshi Nakamoto, the network will produce a maximum of 21 million assets. The halving is one of the ways the network stretches the amount of time it would take to reach this limit. However, there are several other reasons why the halving is crucial.

Firstly, it forces miners to find ways to optimize the costly method of mining Bitcoin, which requires expensive hardware and heavy energy consumption. In addition, the community engagement derived from Bitcoin’s halving in the periods before and after the event is advantageous to the network. The anticipation sparks educational conversations, which promote popularity and adoption as people discuss these concepts. In turn, this may lead to a greater number of Bitcoin transactions being made at online retailers, crypto casinos, and countless others.

Perhaps the most popular effect of the halving is Bitcoin’s scarcity. Since the event reduces the volume entering circulation, fewer coins are available per time. This kicks in market forces that correlate availability with price. Essentially, the value of Bitcoin increases when there is scarcity.

Historically, the value of Bitcoin increases after every halving. Following each event, Bitcoin usually begins a commendable rally over the next year, with a significant bull run pushing prices to new records. For instance, Bitcoin went from $12 at the first halving in November 2012 to more than $1,100 by November 2013. The market also recorded a heavy rally a year after the second halving, from $664 in July 2016 to $17,760. Bitcoin then entered another bull market after the May 2020 halving, spiking the price from $9,734 to $67,649. The historical pattern suggests that by 2025, Bitcoin could double its current all-time high of $73,800.

In addition to a price rally, there are a few other expectations from Bitcoin’s 2024 halving. Firstly, there is the potential for more adoption because the event inspires increased interest, which can drive acceptance for BTC as a great store of value and also an investment vehicle.

However, there is a potentially negative effect for miners. Bitcoin miners may have to review their operations to prioritize mining activities in areas with affordable power or renewable energy. Bitcoin might also face a reduction in mining activity because block rewards may not be worth the mining expenses incurred. Unfortunately, this creates security problems. The possibility exists that miners abandon their machines because of disproportionate costs, reducing the hash rate. Unfortunately, fewer miners mean a lower hash rate, which could undermine Bitcoin’s security.

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