On Friday, just after 8:09 p.m. Eastern, the fourth bitcoin halving took place, leading to a new issuance rate of 3.125 bitcoin roughly every ten minutes. Although a significant event, its potential to ignite a substantial surge in bitcoin prices remains uncertain, contrary to previous instances. Rather than a price catalyst, the halving symbolizes bitcoin’s value as a hedge against inflationary pressures in the broader economy.
Miners, more than other participants, might feel the immediate repercussions primarily due to a reduction in their revenue streams. Nonetheless, many are investigating alternative strategies to compensate for this revenue decline.
Despite the excitement surrounding the event, bitcoin maintained its stability around the $63,000 mark in the immediate hours following the halving. The event’s significance lies in halving the rate of new bitcoin issuance and rewards for miners, which directly impacts the supply dynamics as only 21 million bitcoin can ever exist. This makes the event a focal point for both miners and investors.
Post-halving, the new bitcoin creation rate stands at 3.125 every ten minutes, following the validation of every 210,000 blocks, an event embedded into the network’s protocol since January 2009.
The reduction in block subsidy, now set at 3.125 bitcoin, underscores the halving’s impact. This subsidy plays a crucial role as the reward for miners validating new blocks in the network. Additionally, miners garner transaction fees from blocks, supplementing their earnings.
Notably, the halving block, the 840,000th on the network, was mined by ViaBTC. The successful miner earned over 40 bitcoin in block subsidy and fees, equating to more than $2.6 million, based on data from mempool.space.
The spike in earnings, exceeding 7 bitcoin or roughly $450,000 from the preceding block validations, remains unexplained but suggests a willingness among users to pay premium fees for transaction inclusion in the 3,050 that filled the halving block.
The price of bitcoin hitting new all-time highs in the preceding months suggests the halving’s impact might have already been anticipated by the market.
Fueling the recent rally, spot bitcoin exchange-traded funds (ETFs) have perhaps exerted more influence on current price levels than the halving itself.
Symbolically, this halving resonates with bitcoin’s impartial and stable monetary policy, a sharp contrast to the uncertain monetary climates many face today. Thomas Perfumo from Kraken highlighted this, noting the appeal of bitcoin as an alternative currency amid global skepticism about traditional currency stability.
However, experts from JPMorgan and Deutsche Bank suggest that the current bitcoin prices have already factored in the halving’s effects, reducing the likelihood of immediate price jumps following the event.
In the short term, the halving’s implications might primarily play out within the bitcoin mining sector, potentially leading to consolidation as the industry adapts to the new economic realities.
