Important points
- The fourth Bitcoin halving occurred just after 8:09pm ET on Friday, with the rate of new Bitcoin creation dropping to 3.125 approximately every 10 minutes.
- Despite being a notable event, it is unclear whether this will lead to a sharp rise in Bitcoin prices as in the past.
- The Bitcoin halving may be best viewed as more of a symbolic event than anything else, as it illustrates Bitcoin's value proposition against a backdrop of relatively high inflation rates.
- While miners are perhaps more affected by the loss of revenue than anyone else, some are exploring other avenues to make up for the shortfall.
The highly anticipated fourth Bitcoin halving occurred just after 8:09pm ET on Friday. Bitcoin remained flat immediately after the halving, stabilizing around $63,000.
After the halving, the rate of new Bitcoin issuance and success fees for Bitcoin miners will be cut in half. There can only be 21 million Bitcoins in existence, and fewer new tokens in circulation could affect the price of Bitcoin. That's why the halving is closely watched by miners and investors alike.
What happened during this half-life?
After today's halving, the rate for a new Bitcoin created approximately every 10 minutes is 3.125. These halving events occur every 210,000 blocks verified, or approximately every four years, and were built into the network's design when it was first launched in January 2009.
After the halving, the block reward or subsidy associated with validating each new block of transactions on the Bitcoin network will be reduced by half. Block subsidies are newly created Bitcoins included in blocks as a reward to the miners involved. Therefore, effectively the block subsidy for a successful miner is 3.125 Bitcoins.
In addition to subsidies, miners also collect fees associated with transactions within a block.
This halved block was mined by ViaBTC and was the 840,000th block mined on the Bitcoin network. However, it is interesting to note that successful miners took home just over 40 Bitcoins, or the equivalent of over $2.6 million, in block grants and fees as rewards, according to data from mempool.space.
This fee is much higher than 7 Bitcoins, and the total fee earned for successfully validating the block immediately before the halving block is equivalent to just over $450,000. The reason for this spike is not clear, but perhaps people were willing to pay higher fees to make the 3,050 trades included in the halved block.
What happens next?
In the past, there have been halvings, and Bitcoin prices have hit new all-time highs in the months following the event. However, things are different this time, with Bitcoin prices already reaching all-time highs in the months before the halving.
Much of the recent rally has been driven by spot Bitcoin exchange-traded funds (ETFs), perhaps indicating that the demand generated by that market could have a bigger impact on Bitcoin price than the halving event. Masu.
According to Thomas Perfumo, head of strategy at Kraken, the halving is a testament to Bitcoin's apolitical and solid monetary policy at a time when many people around the world are having doubts about their national currencies. It is said that there is some additional symbolism in the period.
“While some people are looking at traditional currencies, like inflation, interest rates and the economic environment they live in, they are looking at this alternative currency, Bitcoin,” Perfumo said. bloomberg.
However, analysts at JPMorgan and Deutsche Bank said that the impact of the halving is largely baked into the current price of Bitcoin, and it is unlikely that the price will rise significantly as a result of the halving.
According to these reports, the short-term impact of the halving may be limited to the Bitcoin mining sector, with consolidation likely occurring as lower profitability reduces overall hashrate.
That said, there are also signs that even if the halving doesn't lead to a price boom, there may be a path to increased revenue for miners. This revenue increase is driven by an increase in total fees from transactions led by recent developments such as Ordinals and Layer 2 networks.
