Printing more money is not a solution to the financial crisis and this is what we have been experiencing with our traditional finance. The Bitcoin halving is an event that happens every four years and is one of the events that aids the huge value of Bitcoin.
What is Bitcoin Halving?
This simply means, splitting into half the Bitcoin mining reward. This is a standard setup by the Bitcoin blockchain creators to continuously reduce the rate of introduction of cryptocurrency (Bitcoin).
By History, the first reward in 2009 was 50 BTC, followed by 25 BTC on Nov 28, 2012, 12.5 BTC on Jul 9, 2016, 6.25 BTC on May 11, 2020 and now, 3.125 BTC on Apr. 19, 2024.
The continuous halving of Bitcoin will end in 2140 when the number of Bitcoin in circulation reaches the documented value of 21 Million maximum supply. Till now, Apr. 2024, 19.69 Million are in circulation.
Still reviewing the last Bitcoin halving impact, it was a bullish scenario for BTC in 2020 as the coin's price moved from $6877.62 a month before halving to $8821 at the time of the event itself. Cryptocurrency is volatile, however, BTC price continued to rise.
Why Does Bitcoin Halving Matter?
If this is your first Bitcoin halving experience, with the above explanation, you should have an overview of what it means.
The effects of this event are many however, let's look at some of them:
Inflation: Bitcoin halving is set to counter any inflationary effects on BTC and thereby engage in continuous decrease in the reward amount and at the same time maintain scarcity.
Investing: BTC (Bitcoin) was introduced as a payment method and not as an investment. The main focus of Bitcoin was to remove the need to have regulatory agencies or 3rd parties involved in transactions. The potential of gain BTC has proved in the market, changing the perspectives of users and their Bitcoin investing into the new view of speculation as users now hope for gains.
Mining: Here also, those involved in it, engage with others to profit and in the past, Miners made a lot of gains and this reward decreased over the year. As the BTC reward decreases, which occurs every 210,000 blocks, enormous amounts of money and energy are involved to be relevant in the Bitcoin mining industry. With this halving, smaller mining companies or miners will experience a lower chance, only miners with large-scale mining facilities upgrading their mining capacity will continue to maintain their position in the industry.
Consumers: BTC halving is affecting people buying Bitcoin as the will be affected by price fluctuation. Again, for remittance sake, halving event remain the same just as it does to the shoppers.
General Conclusion About Bitcoin
The introduction of Bitcoin brought in freedom and a peer-to-peer solution, but in terms of mining and its effect to the environment as many large-scale mining company upgraded their facilities which then require more energy to generate a reasonable reward, more heat is released to the surrounding. Also, cost of energy in used is increasing and at 210,000 blocks rewards reduces, small-scale miners are closing out while some are vrelocating to low energy cost regions to deploy inefficient mining rigs. The halving have a positive impact on pice action of the asset, while on the other side after miners's reward. To stay relevant in the industry, you then need to close the gap, more energy, upgrade you mining rigs and stay on top.
Happy 420! (April 20, 2024)
