The Bitcoin halving is a big event that took place on 19th April 2024. This happens once every few years. The halving led to the price of Bitcoin holding steady at $63,907 as many anticipate what could happen in the months to come.
You probably already use Bitcoin for online purchases or crypto gambling. Will the halving affect your online Bitcoin transactions? Generally, not much. How about your crypto gambling? Similarly, this event will not have a significant impact since you will only be using it to fund your casino account. But keep in mind that online casino sites that accept Bitcoin also experience price volatility.
On the other hand, if you have directly invested in Bitcoin, this means you have sell or buy positions on exchanges like Binance, such major news can impact your holdings. But will the halving boost your purchasing power? It just might. Here is all you should know about this crypto phenomenon.
What Is the Bitcoin Halving?
Bitcoin mining is what adds new transactions to the blockchain. It is also how new Bitcoin are made. The goal is to solve complex math problems and get rewarded with new Bitcoin for being the first to solve them. The amount of new Bitcoin in each block reward gets cut in half every four years.
This cut in half of the block reward is called the Bitcoin halving. Satoshi Nakamoto, the creator of Bitcoin, set this rule when he made Bitcoin. It cannot be changed.
The current block reward that miners get is 6.25 Bitcoin per block. However, after the halving, it will be reduced to only 3.125 Bitcoin per block. This big drop in rewards could impact miners.
How Will the Halving Affect Bitcoin’s Price?
In the past, Bitcoin’s price has gone way up after previous halving events. Each time the amount of new Bitcoin was cut in half, the price eventually reached record highs.
However, this time the halving did not have any immediate impact for a few key reasons:
- Bitcoin already hit a new all-time high price last month before the halving. This has never happened during previous halving cycles.
- More people and big investors are now buying Bitcoin. This extra demand might already be priced into the current Bitcoin value.
- Interest rates are high right now, which can make risky investments like Bitcoin less appealing. People might prefer putting money in safer options that earn interest.
- The price of Bitcoin has been going down in April after reaching record highs in March. This suggests the market may have already priced in the halving.
So while many people expect the lower supply of new Bitcoin to increase prices, it’s not guaranteed. Other factors, like overall demand, will play a big role too. Anything could happen in the short-term.
What Does the Halving Mean for Bitcoin Miners and Companies?
Bitcoin mining companies earn money by receiving block rewards of new Bitcoin. They also get transaction fees. But the block reward has always been the main source of miner revenue.
With block rewards getting cut in half, it will be a big hit to mining company profits. The stocks of publicly traded mining firms have already fallen a lot in April. These include companies like Marathon Digital, Riot Platforms, and Hut8.
For mining to stay profitable long-term with lower rewards, a few things need to happen:
- The Bitcoin price needs to increase to offset the smaller rewards
- Mining companies need to lower their electricity and operating costs
- Transaction fees need to become a bigger part of miner revenue instead of block rewards
Any company that holds a lot of Bitcoin, like MicroStrategy, could see its stock impacted. If Bitcoin’s price drops, the value of their Bitcoin holdings will go down too. That’s a risk to their share price.
Increased trading around the halving could also boost revenue for crypto exchanges short-term. Companies like Coinbase make money on trading fees. So higher Bitcoin volume would help them. Yet, there is no certainty about the longer-term impact.
Final Thoughts
The Bitcoin halving is a major event that only happens every four years. It has big implications for the supply of new Bitcoin coming into existence. Miners will see their rewards cut in half after the halving.
In the past, this lowered supply has led to higher prices down the road. But this time could be different with more mainstream interest in Bitcoin already. The only thing that’s certain is uncertainty. No one can say exactly what will happen to the price of Bitcoin.
What is clear is that miners will face challenges. They need to adapt to stay profitable. The Bitcoin network itself will also need to evolve. Block rewards can’t pay for security forever. Transaction fees have to become more important long-term.