Key Points
- The Bitcoin halving 2024 event, which reduces mining rewards by 50%, has significant implications for miners and market dynamics.
- Despite potential bullish impact, macroeconomic and geopolitical factors may affect short-term bullishness towards Bitcoin.
The Bitcoin halving event in 2024, likened to an Olympic-like occasion in the cryptocurrency world, took place at 12 a.m. GMT on Saturday. This event has immediate implications for mining companies in the digital assets ecosystem.
This halving, a pre-coded Bitcoin software update, happens every four years. This is the time it takes to mine 210,000 blocks in the Bitcoin network.
The Process of Bitcoin Halving
This year’s halving, the fourth in the series, reportedly comes from the crypto mining pool ViaBTC. This halving included an additional reward of 37.6256 BTC ($2,401,399) paid as fees of the 3,050 transactions included in the block. The previous three halving events took place in 2012, 2016, and 2020.
The first major implication of the completed halving is a 50% reduction in the mining reward. This adjustment, determined by the code governing Bitcoin’s blockchain, aims to maintain a hard cap of 21 million Bitcoin units and prevent inflation in the digital currency.
The first Bitcoin halving in 2012 rewarded miners with 50 BTC for mining a block. Now, due to the constant reduction, miners will earn 3.125 BTC for each mined block. This reduction mechanism was programmed by Satoshi Nakamoto, Bitcoin’s anonymous founder.
Implications of the Bitcoin Halving Event 2024
The halving event is expected to have a significant financial impact on Bitcoin mining companies, potentially eliminating billions of dollars in annual revenue. Before this year’s halving, analysts from American investment banking giant JPMorgan Chase & Co (NYSE: JPM) highlighted challenges for miners. These include production cost, income decline, and electricity concerns.
Several mining companies looked for sustainable mining options before the halving. For example, Texas-based Bitcoin mining firm Giga Energy partnered with Argentinian firms. As the sector prepares for consolidation, publicly-listed Bitcoin miners are expected to gain market share. They can leverage greater access to funding and equity financing.
Previous halving events were completed without disrupting the functioning of the Bitcoin blockchain. Miners will now increasingly rely on transaction fees as a source of revenue amidst dwindling rewards. There are 64 expected halving events before reaching the 21 million cap around 2140 when all Bitcoin blocks would be mined.
The price trajectory of Bitcoin has remained largely unchanged despite speculations and projections by different analysts before the halving. For instance, Bitwise CEO Hunter Horsley predicted the digital asset’s surge to $100,000 after the halving event. However, market watchers say it is still too early but a bullish run is anticipated in the coming days.
At the time of writing, the price of Bitcoin is pegged at $63,665.87, down by 1.61% in the past 24 hours.
