Bitcoin
Bitcoin Halving: What You Need to Know
NEW YORK (AP) — The “miners” who mine complex-mathematical bitcoins are taking a 50% pay cut — effectively reducing new production of the world’s largest cryptocurrency once again.
Bitcoin’s last halving took place on Friday night. Shortly after the highly anticipated event, the price of bitcoin remained stable at around $63,907.
Now, all eyes are on what will happen in the future. In addition to the long-term behavior of bitcoin’s price, which depends heavily on other market conditions, experts point to potential impacts on the daily operations of the asset’s miners themselves. But, as with everything in the volatile cryptoversethe future is difficult to predict.
Here’s what you need to know.
WHAT IS BITCOIN HAVING AND WHY DOES IT MATTER?
The Bitcoin “halving,” a pre-scheduled event that occurs approximately every four years, impacts bitcoin production. Miners use sets of noisy, specialized computers to solve complicated mathematical puzzles; and when they complete one, they receive a fixed number of bitcoins as a reward.
Halving does exactly what it sounds like: it cuts your fixed income in half. And when the mining reward drops, so does the number of new bitcoins entering the market. This means that the supply of currencies available to satisfy demand grows more slowly.
The limited offer is one of the main features of bitcoin. Only 21 million bitcoins will ever exist, and more than 19.5 million of them have already been mined, with less than 1.5 million remaining to be mined.
As long as demand remains the same or increases faster than supply, bitcoin prices should rise as halving limits production. Because of this, some argue that bitcoin can counteract inflation — yet experts emphasize that future gains are never guaranteed.
HOW OFTEN DOES HALF OCCUR?
According to the Bitcoin code, halving occurs after the creation of every 210,000 “blocks” – where transactions are recorded – during the mining process.
No calendar date is set, but this is divided approximately once every four years.
WILL HALF IMPACT THE PRICE OF BITCOIN?
Only time will tell. After each of the three previous drawdowns, the price of bitcoin was mixed in the first few months and ended up significantly higher a year later. But, as investors know, past performance is not an indicator of future results.
“I still don’t know how significant we can say the halving is,” said Adam Morgan McCarthy, research analyst at Kaiko. “The sample size of three (previous halving) is not big enough to say ‘It’s going to go up 500% again’ or anything like that.”
At the time of the last halving in May 2020, for example, the price of bitcoin was around $8,602, according to CoinMarketCap – and rose almost sevenfold to almost $56,705 in May 2021. Bitcoin prices Bitcoin nearly quadrupled a year after the halving and July 2016 surge. It increased nearly 80-fold a year after bitcoin’s first halving in November 2012. Experts like McCarthy emphasize that other bullish market conditions contributed to these returns.
Friday’s halving also comes after a year of sharp rises for bitcoin. As of Friday evening, the price of bitcoin was $63,907 per CoinMarketCap. That’s below the all-time high of around $73,750 reached last month, but is still double the asset’s price from a year ago.
Much of the credit for bitcoin’s recent rise is given to the initial success of a new way of investing in the asset – Spot bitcoin ETFs, which were only approved by US regulators in January. A research report from crypto fund manager Bitwise found that these spot ETFs, short for exchange-traded funds, saw inflows of $12.1 billion during the first quarter.
Bitwise senior crypto research analyst Ryan Rasmussen said persistently or growing demand for ETFwhen combined with the “supply shock” resulting from the upcoming halving, it could help boost the price of bitcoin even further.
“We expect the price of Bitcoin to perform strongly over the next 12 months,” he said. Rasmussen notes that he has seen some predicted earnings reach as high as $400,000, but the “most consensus estimate” is closer to the $100,000 to $175,000 range.
Other experts emphasize caution, pointing to the possibility that gains have already been achieved.
In a Wednesday research note, JPMorgan analysts stated that they do not expect to see post-halving price increases because the event has “already been priced in” – noting that the market is still in overbought conditions according to their analysis of the bitcoin futures.
AND THE MINERS?
Meanwhile, miners will be challenged to compensate for the reduction in rewards while keeping operational costs low.
“Even if there is a slight increase in the price of bitcoin, (halving) could really impact the mining company’s ability to pay the bills,” said Andrew W. Balthazor, a Miami lawyer specializing in digital assets at Holland & Knight. “You can’t assume that bitcoin will just go to the moon. As a business model, you need to plan for extreme volatility.”
The best-prepared miners likely laid the groundwork early, perhaps by increasing energy efficiency or raising new capital. But cracks can emerge for less efficient and struggling companies.
One likely outcome: Consolidation. This has become increasingly common in the bitcoin mining industry, especially after a major crypto crash in 2021.
In its recent research report, Bitwise found that total mining revenue fell one month after each of the three previous reductions. But these numbers recovered significantly after a full year – thanks to spikes in the price of bitcoin, as well as the expansion of their operations by larger miners.
Time will tell how mining companies fare after this latest halving. But Rasmussen is betting that the big players will continue to expand and use the industry’s technological advances to make operations more efficient.
WHAT ABOUT THE ENVIRONMENT?
Identifying definitive data on the environmental impacts directly linked to the bitcoin halving is still a question mark. But it’s no secret that crypto mining consumes a lot of energy in general – and operations that depend on polluting sources have raised particular concern over the years.
Recent research published by the United Nations University and Earth’s Future magazine found that the carbon footprint of bitcoin mining between 2020 and 2021 in 76 countries was equivalent to emissions from burning 84 billion pounds of coal or operating 190 power plants. power plants powered by natural gas. Coal met the majority of bitcoin’s electricity demand (45%), followed by natural gas (21%) and hydropower (16%).
Environmental Impacts of Bitcoin Mining largely come down to the energy source used. Industry analysts say efforts to use more clean energy have increased in recent years, coinciding with growing calls for climate protections from regulators around the world.
Production pressures may cause mining companies to look to cut costs. Ahead of the latest halving, JPMorgan warned that some bitcoin mining companies may “seek to diversify into low energy cost regions” to deploy inefficient mining rigs.
Bitcoin
‘This is huge’ — Billionaire Mark Cuban issues ‘incredible’ Bitcoin and crypto prediction amid price slump
Bitcoin has surged again this year under former President Donald Trump Cryptocurrency boosts US presidential election in November with ‘revolutionary’ plan.
The price of bitcoin has surged to more than its all-time high in recent months, surpassing $70,000 per bitcoin and triggering a wave of mega-optimistic predictions about the price of bitcoinalthough it fell again this week to below $65,000 after the Federal Reserve kept interest rates steady.
Now, as Elon Musk suddenly breaks his silence on bitcoin and cryptocurrenciesBillionaire investor Mark Cuban called a California plan to digitize 42 million car titles using blockchain an “incredible step forward” and “huge” for cryptocurrencies.
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Mark Cuban, famous Shark Tank investor and billionaire owner of the NBA team Dallas Mavericks, has… [+] called a cryptocurrency update “amazing” amid bitcoin’s price slump.
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The California Department of Motor Vehicles (DMV) has digitized 42 million car titles using blockchain, it was reported by Reuters, through technology company Oxhead Alpha on the Avalanche blockchain and designed to detect fraud and facilitate the securities transfer process.
“This is an incredible development for crypto,” Cuban, best known as an investor on TV’s Shark Tank and owner of the Dallas Mavericks NBA team, posted on X, joking that U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler could sue the state as part of his hostility toward cryptocurrencies and blockchain technology.
“The reason this is huge for crypto is because people who hold the tokens will have an app with an Avalanche wallet,” Cuban said. “Tens of millions of Californians having and using a crypto wallet in the next five years, or however long it takes, normalizes the use of wallets and crypto.”
John Wu, president of Avalanche developer Ava Labs, told Reuters that California’s DMV is “creating a wallet that you can download on your phone.”
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Bitcoin’s price has rallied this year, triggering a wave of bullish bitcoin price predictions from… [+] people like billionaire Mark Cuban.
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Last month, Cuban predicted that if the US dollar falls as the global reserve currency, bitcoin could become “a global ‘safe haven’” and a “global currency.” potentially sending the price of bitcoin to a much higher level.
According to Cuban, bitcoin could become what its most ardent supporters “envision” — a means “of protecting our economies… This is already happening in countries facing hyperinflation.”
The price of bitcoin has skyrocketed over the past year, largely due to the world’s largest asset manager, BlackRock, leading a bitcoin attack on Wall Street.
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U.Today – Renowned economist and cryptocurrency critic Peter Schiff has criticized Michael Saylor’s recent hype about the growing adoption of cryptocurrencies as a strategic treasury asset by corporations.
Michael Saylor, a well-known Bitcoin advocate and president of MicroStrategy, recently shared his enthusiasm on X about the growing adoption of Bitcoin as a strategic treasury asset.
Citing a comment made by Bitcoin investor Bill Miller in a recent interview with CNBC, Saylor tweeted: “We now have more companies coming forward and saying we will put Bitcoin on our balance sheet as a strategic treasury asset.”
However, not everyone shares Saylor’s enthusiasm. Schiff, a vocal Bitcoin critic and gold bull, was quick to respond with his usual skepticism. In a pointed tweet, Schiff argued: “Bitcoin is neither strategic nor appropriate as a treasury asset. Companies should not risk shareholder funds. They should pay dividends and let shareholders risk their own money.”
Bitcoin enthusiasts are not intimidated
However, Schiff’s criticism shouldn’t deter Bitcoin enthusiasts, who often take Schiff’s words with a pinch of salt. To put things in context, Michael Saylor began buying Bitcoin in 2020 as an inflation hedge and alternative to money. Saylor’s company, MicroStrategy, is among the largest public holders of Bitcoin in the world. As of June 20, it held 226,331 BTC, purchased for around $8.33 billion at an average price of $36,798.
Over the weekend, Schiff was surprised when 87% of the more than 11,000 Bitcoin holders who responded to his X survey said they would not sell any of their Bitcoin even if the price dropped more than 99% to $120. They said not only would they not sell, but that they would continue to buy even when prices dropped.
Schiff unexpectedly revealed that “the main selling point for investors to buy Bitcoin is its excellent past performance record.”
At the time of writing, Bitcoin is trading at $66,067, having reached all-time highs of nearly $74,000 in mid-March.
In a week of drastic fluctuations, the price of Bitcoin (BTC) has retreated from its highs and is currently trading at US$66,250, down 0.9% in European trading.
This volatility comes on the heels of a significant surge above $70,000 earlier in the week, fueled by former President Donald Trump’s ambitious cryptocurrency plans announced in a Bitcoin Conference in Nashville.
Trump’s announcement to fire Securities and Exchange Commission Chairman Gary Gensler and establish a strategic Bitcoin reserve if elected president has temporarily sent the cryptocurrency market into a frenzy.
However, the excitement was short-lived as a series of events unfolded which caused investor sentiment to sour.
A significant sell-off of about 8% was triggered when the US Marshals Service moved $2 billion in Bitcoin for new wallets.
This move has reignited fears of a potential large-scale liquidation, compounded by lingering concerns over a possible Bitcoin liquidation from Mt. Gox. Early this morning, Mt. Gox administrator transferred US$2.2 billion value of your BTC assets in a new wallet.
Meanwhile, the US Bitcoin ETF spot market is showing signs of fluctuation, according to data from SoSo Value. On July 30, Bitcoin spot funds experienced their first net outflow in five days, totaling $18.3 million.
The Grayscale Bitcoin Trust (GBTC) saw outflows of $73.6 million, while the BlackRock iShares Bitcoin Trust (IBIT) attracted $74.9 million in inflows. But outflows from other funds left the category in the red at the end of Tuesday’s trading session. The total net asset value of spot Bitcoin ETFs currently stands at a substantial $58.5 billion.
In other crypto news, Ripple (XRP) is up 8.6% in the past 24 hours, hitting over 64 cents – its highest point since March 25, according to CoinGecko. data.
This rally comes amid a scheduled token unlock and growing optimism around a potential deal in the long-running SEC vs. Ripple lawsuit.
The crypto community is closely watching the SEC’s actions, particularly its intention to amend its complaint against Binance regarding “Third-Party Cryptocurrency Securities,” which some interpret as a positive sign for Ripple.
On a market analysis noteSingapore-based cryptocurrency trading desk QCP Capital wrote that while election headlines continue to dominate, several crucial macroeconomic events loom on the horizon.
“Election headlines will continue to be a key focus, but several key macroeconomic events are also on the horizon. Key events starting with the FOMC meeting on Wednesday, megacap tech earnings (Apple, Amazon, Meta) throughout the week, and unemployment data on Friday,” QCP Capital wrote.
Edited by Stacy Elliott.
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