Halving 2024 is approaching; this is its impact in history.

Expected around April 17, 2024, the fourth halving will reduce miners' rewards from 6.25 BTC to 3,175 BTC at block height 840,000.

There will be 32 halvings in total, with 29 more halvings predicted until 2140 when new BTC creation ends.

According to data from IntoTheBlock, currently, around 900 Bitcoins are mined daily worldwide, serving as rewards for authenticating miners and securing the network.

Historically, the value of Bitcoin has skyrocketed in the same year as the halving event.

Overall, Bitcoin has experienced four price increases coinciding with halving events. Bitcoin reached $1,000 after the halving in 2012, reaching $20,000 after the 2016 event.

The most recent halving occurred in mid-May 2020, before a bull run that peaked in November 2021 at an all-time high of $69,000.

First halving, 2012

In 2012, Bitcoin was relatively unknown. However, a year before the first halving, Bitcoin's price skyrocketed almost fourfold.

The first Bitcoin halving event occurred at block 210,000, reducing the block reward from 50 BTC to 25 BTC.

The event has created anxiety among cryptocurrency investors, as concerns could discourage miners.

Just a month before the 2012 halving, BTC was at $10.26 and there were no significant price movements until the event. One month after the halving, the average price was $13.42.

Second halving, 2016

The second halving took place on July 9, 2016 and reduced the block reward from 25 BTC to 12.5 BTC, pushing Bitcoin and cryptocurrencies into the spotlight, coinciding with the altcoin and ICO craze, which saw The fraud rate is quite large.

On June 9, 2016, BTC was priced at 583.11 USD and increased to 597.5 USD after the event.

The halving event saw Bitcoin price rise from around $650 to nearly $19,000 before falling below $4,000.

Third halving, 2020

The third halving in 2020 occurred amid the COVID-19 pandemic.

This event, at block 630,000, halved the block reward to 6.25 BTC. During this time, influential investors publicly endorsed Bitcoin. As organizations begin to explore adoption, cryptocurrency payments become more popular.

In the six months leading up to the 2020 halving, Bitcoin experienced a 300% price increase.

Before the 2020 halving, Bitcoin traded at around $9,000, reached a record high of $67,549 after the halving, then stabilized at $20,000 for a time.

4th Halving, 2024

Historical data analyzed by IntoTheBlock shows an upward trend in prices following halving events, while the current cycle shows prices rising earlier than expected, with investors perhaps anticipating the “halving effect.” .

A recent JPMorgan report shows the possibility of BTC price falling to $42,000 due to reduced miner rewards and higher production costs due to the April halving event.

This cycle will continue until a total of 21 million Bitcoins across the network are mined, expected in 2140.

Impact of Bitcoin halving

The biggest impact is on Bitcoin price. For cryptocurrency holders, their total coin count remains unchanged after the event. However, if they want to buy more, they may encounter difficulties because the rewards are reduced, making the supply no longer abundant. This causes an imbalance in supply and demand, causing Bitcoin prices to increase a few months later.

For example, the price of Bitcoin before halving in November 2012 was 12 USD, but nearly a year later it increased to nearly 1,000 USD. With the second halving in July 2016, the price of Bitcoin dropped to $670 and then increased to $2,550 in July 2017, then reached $19,700 later that year.

After the most recent "halving" in May 2020, Bitcoin price increased 430% from 11,500 to 61,300 USD in mid-March 2021, before reaching a peak of 69,000 USD in November 2021.

Bitcoin halving and impacts on cryptocurrency players - 1

However, Ms. Lynn Hoang, representative of Binance Vietnam, said that the price fluctuations of the fourth halving period next month will be more difficult to predict after the US approved the Bitcoin ETF earlier this year.

"Bitcoin ETFs will significantly change the balance of supply and demand in the market. Demand for buying will be higher while the number of newly created Bitcoins will decrease by half," Ms. Lynn analyzed. Data on the blockchain shows that every day, Bitcoin ETFs are collecting an average of 2,450 BTC while miners are only mining 900 BTC. After the halving, this number will decrease to 450 BTC, which can cause Bitcoin price to fluctuate strongly.

A positive impact of the halving will be a reduction in inflation rates across the network. In 2011, the inflation rate of the Bitcoin network was 50%, but after 2012 it decreased to 12% and continued to decrease by 4-5% in 2016. Currently Bitcoin has an inflation rate of 1.74%. The decreasing rate helps the cryptocurrency stabilize its value.

Meanwhile, for miners, Bitcoin halving not only reduces their rewards but also increases the difficulty of the algorithm, making competition between mining factories more intense. Some older generation specialized excavators may not be effective in running the algorithm, forcing you to upgrade to new equipment. According to analysis company Galaxy, after halving 2024, about 20% of ASIC machines across the Bitcoin network will stop working because they are not competitive enough. Some miners such as Bitmain's S9, Canaan's A1066 and MicroBT's M32 will be offline. This is why miners are not excited every time they have.

The increased difficulty of the algorithm also causes some small-scale mining factories to be eliminated from the game. Miners will profit if the price of Bitcoin increases after the halving, but they may have to leave the network when mining is not profitable.

The downside of halving

According to Ms. Lynn Hoang, when talking about halving, people often focus on price fluctuations. But taken as a whole, the event could also have a dangerous impact on Bitcoin.

First is the issue of environmental friendliness. For a long time, Bitcoin has often been criticized for consuming too much energy to operate miners. Halving increases algorithmic difficulty, forcing miners to increase capacity, thereby consuming more energy.

However, this is still a controversial issue. There are opinions that because of profit pressure, miners are switching to more sustainable energy sources such as solar power. Upgrading to new generation miners also helps save energy, thereby making the Bitcoin network more environmentally friendly.

However, the bigger risk is the problem of centralized mining across the network. When the level of competition is high, small miners will be eliminated, most of the computing power will be in the hands of large-scale mining factories. BTC.com data from 2016 to 2021 shows that 30-40% of hash rate across the network is regularly controlled by the two largest mining pools, Foundry USA and AntPoo. On February 28, these two groups controlled nearly 50% of the Bitcoin network's hashing power, according to CoinDance. Hash rate represents the computing power for Bitcoin mining.

After the halving, if miners find there is no more profit and stop mining, transactions on the Bitcoin network will be clogged, and thieves can dominate network operations. Additionally, when mining is no longer decentralized but in the hands of several parties, they can retain the right to moderate transactions by choosing not to confirm them. This goes against Satoshi's original ideals of Bitcoin's decentralization and censorship-resistant nature. The positive point is that there has never been a single time when miners left the network after the halving. Bitcoin miners will find a way to balance and overcome halvings to continue the industry.