Understanding the HalvingBitcoin protocol halving miners’ reward every four years. Lire la suite of Bitcoin and its impact on the market in 2024 

What is the halving of Bitcoin?

Bitcoin halving is a scheduled event that halves the reward given to miners for each new block created. This means that miners receive 50% less bitcoin for each transaction they verify. This halving takes place approximately every four years, or more precisely every 210,000 blocks.

The latest halving of bitcoin: when did it start?

The previous halving took place on the night of 19-20 April 2024, when the reward per block fell from 6.25 to 3.125 bitcoins.

Why is this important for crypto investors?

Halving is crucial for traders and investors, as it limits the supply of new coins. If demand remains strong, prices could rise. For example, during the halving in May 2020, the price of Bitcoin rose from $6,877.62 to $8,821 at the time of the event, and continued to rise to $49,504 a year later.

The latest halvings: a brief history

Halving 2012: the start of a new era

The first halving took place in November 2012. At that time, the reward for each block mined fell from 50 to 25 bitcoins. What is fascinating is the impact on the price of Bitcoin. Six months after the halving, the price of Bitcoin reached a new high, rising from $12 to more than $260.

Halving 2016: the rise to power

The second halving took place in July 2016. The reward fell from 25 to 12.5 bitcoins. Once again, the market reacted positively. Bitcoin began to gain popularity and adoption, and its price reached all-time highs in 2017, flirting with $20,000.

Halving 2020: the era of maturity

The third and final halving took place in May 2020, where the reward fell from 12.5 to 6.25 bitcoins. While the immediate impact on the price wasn’t as dramatic as previous times, Bitcoin has seen steady growth, peaking at over $60,000 in 2021.

Halving 2024: impact still uncertain

It is still too early to know what the long-term impact will be, but a few weeks after the event, the share price is still stable at around $60,000.

How are Bitcoin miners adapting to halving?

The challenges facing minors

Financial pressure: The Bitcoin blockchain mining industry is under considerable pressure, not least because of falling share prices and rising energy costs. For example, Core Scientific, a major player in the sector in the US, has filed for bankruptcy, although this means restructuring rather than going out of business.

Over-indebtedness: Many companies have taken on large amounts of debt to buy mining machines, with some borrowing at rates of up to 25% a year. This over-indebtedness is particularly noticeable in the United States.

Stopping business: Due to the fall in Bitcoin’s price, many miners have been forced to put their activities on hold. According to Shixing Mao, founder of F2Pool, up to 800,000 miners have stopped working.

Adaptation strategies

Geographic diversification: Some companies, such as BigBlock Datacenter, have turned off their machines in France, where electricity costs are high, but are continuing their operations in Kazakhstan and Siberia, where costs are more favourable.

Cost optimisation: Miners are also looking to optimise their costs by investing in more efficient machinery and negotiating lower electricity tariffs.

Risks and how to reduce them

VolatilityPrice variation of an asset on a given period. Lire la suite risks: Volatility is one of the most common risks associated with cryptocurrency investments. One day your portfolio could be worth thousands of euros, and the next it could drop significantly. For example, Bitcoin has seen price fluctuations of up to 20% in a single day.

Risk mitigation strategies:

1. Portfolio diversification: investing in different cryptocurrencies can reduce overall risk.
2. Use of stop-loss: setting up automatic sell orders can minimise losses.
3. Continuous monitoring: use real-time monitoring tools to keep abreast of market movements.

Safety risks

Phishing attacks and hacks are common in the cryptocurrency ecosystem. For example, the Bitfinex platform was hacked in 2016, resulting in the loss of millions of dollars in bitcoin.

Risk mitigation strategies:

1. Hot vs. cold wallets: use a cold walletPrice variation of an asset on a given period. Lire la suite to store large amounts of cryptocurrencies.
2. Two-factor authentication (2FA): always activate 2FA for an extra layer of security.
3. Security updates: make sure all your software is up to date to avoid vulnerabilities.

Regulatory risks

Government regulations can have a significant impact on the cryptocurrency market. For example, China recently banned all cryptocurrency transactions, causing prices to plummet.

Risk mitigation strategies:

1. Stay informed: follow news and government announcements related to cryptocurrencies.
2. Consult an expert: talk to a financial adviser to understand the tax and regulatory implications.

Liquidity risks

Liquidity can be an issue, especially for less popular cryptocurrencies. For example, it can be difficult to sell tokens from a little-known DeFi« Decentralized Finance », peer to peer blockchain based financial services such as staking. Lire la suite project without significantly affecting the price.

Risk mitigation strategies:

1. Thorough research: study trading volume and market capitalisation before investing.
2. Use reputable platforms: opt for exchanges with a good liquidity record.

The impact of halving on Bitcoin miners

The halving of Bitcoin not only affects investors and the market, but also Bitcoin miners. The latter play a crucial role in the maintenance and security of the Bitcoin network. Halving halves the reward miners receive for each new block added to the blockchain.

Why are miners important?

Bitcoin miners are the people who validate new transactions and record them on the blockchain. They are rewarded in bitcoins for each block mined. However, halving reduces this reward, which can make mining less profitable, especially for small miners.

How do minors adapt?

1. Energy efficiency: miners are investing in more efficient equipment to cut costs.
2. Mining pools: some miners form pools to share rewards and risks.
3. Diversification : Miners can also diversify their activities by mining other cryptocurrencies.

Each halving thus has a significant impact on Bitcoin miners. Those who plan ahead and adapt to new conditions will continue to prosper, while others may find mining less profitable.

The impact of Bitcoin halving in 2024 on investors

Every halving of Bitcoin is an event that arouses a great deal of curiosity and anticipation among investors. Its major implications for the Bitcoin price will indeed extend to the cryptocurrency market in general.

The expense-reward ratio: a key indicator

The fees-to-rewards ratio is a crucial indicator that measures the proportion of transaction feesFees related to operations; they sometimes are distributed to miners. Lire la suite to total rewards for Bitcoin miners. This ratio can give us clues about the financial viability of the Bitcoin network. A high ratio indicates that transaction fees represent a larger proportion of miners’ income, which is essential for maintaining the security and stability of the network.

Accumulation and distribution cycles

Bitcoin’s historical accumulation and distribution cycles can also help us anticipate the future trajectory of the asset price. Institutional investors have traditionally favoured accumulation cycles, while distribution cycles have been driven by retail demand.

What will be the price of bitcoin: predictions for 2024

According to analyses, Bitcoin could reach a value of $100,000 following the 2024 halving. The reduction in block reward increases the scarcity of the asset, which could drive up demand.

The impact of Bitcoin halving in 2024 on Bitcoin ETFs

The halving of Bitcoin is a key event in the cryptocurrency ecosystem. The 2024 event has halved the reward for miners, from 6.25 to 3.125 BTC per block mined. But what does this mean for Bitcoin ETFs?

Reduced supply and increased demand

Halving reduces the rate at which new Bitcoins are created, which in turn reduces the available supply. Historically, this has often led to an increase in the price of Bitcoin. If the price rises, Bitcoin ETFs, which are essentially funds that track the price of Bitcoin, could also see their value rise.

Consolidation of minors

Halving may lead to consolidation in the mining sector. Smaller miners could be forced out of the market, which could lead to increased centralisation of the network. This centralisation could be perceived as a risk for investors in Bitcoin ETFs, as it could make the network more vulnerable to attacks.

Transaction fees

With this year’s halving , miners will be rewarded with transaction fees rather than new Bitcoins. If transaction fees increase to compensate for the reduced block reward, this could increase costs for ETFs that hold physical Bitcoin.

Conclusion

The 2024 halving could either propel Bitcoin to new heights or plunge it into a period of uncertainty. While no one can predict with certainty how this halving event will affect the price of Bitcoin, many believe that the price will follow a similar pattern to the three previous halvings. The price is likely to rise after the event itself, as the supply of new coins is limited.

For investors, it is therefore crucial to understand these mechanisms and stay up to date with the latest news to maximise returns. The future is uncertain, but one thing is certain: Bitcoin and cryptocurrencies will continue to be an integral part of the global financial landscape.

Frequently asked questions

What impact has halving bitcoin had on the market?

Halving bitcoin generally has a bullish impact on the market. By reducing the supply of new bitcoins, it creates increased demand for the cryptocurrency, which can lead to an increase in its price.

What is the bitcoin price during the halvings?

The price of bitcoin during halvings is difficult to predict. However, in previous halvings, the price of BTC has experienced a significant long-term uptrend.

When does bitcoin halving occur?

The halving of bitcoin occurs every 210,000 blocks mined, which takes about every 4 years. The exact timing of halving can vary depending on the speed at which blocks are mined.

How many bitcoins will be produced in total?

There will be exactly 21 million bitcoins produced in total. This limit is built into the bitcoin protocol and will not change.

What are the long-term effects of halving bitcoin?

Halving bitcoin has a long-term effect on supply and demand for the cryptocurrency. By limiting the supply of new bitcoins, it can create upward pressure on the price. However, other factors such as adoption, regulation and market confidence can also influence the value of bitcoin.