Bitcoin halving gives investors hope for new price records
Published: Friday, Apr 5th 2024, 11:10
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It's that time again in April. The cryptocurrency Bitcoin is facing its next halving, its fourth to date. In the past, the halving of the reward for "mining" new bitcoins has always led to an increase in value, giving bitcoin holders hope for new all-time highs.
Technically speaking, a halving is an automatically executed change in the Bitcoin blockchain. A Bitcoin halving occurs every 210,000 blocks or around every four years. This means that the "last" of the 21 million limited Bitcoin is likely to be mined in 2140.
This is expected to happen again on April 17, 2024: The reward for block number 840,000, which is specified in the Bitcoin program code, will be halved again. The "miners" receive this when solving the highly computationally intensive "block search". This is because new Bitcoin enters the market by providing energy in the form of computing capacity.
After the halving, there is only 3.125 Bitcoin instead of 6.25 per "found" block. With a current value of around 70,000 dollars per Bitcoin, this is still a handsome sum. However, this must be offset against the energy costs for finding a new block.
Energy consumption on the rise
Market observers assume that "mining" will no longer be worthwhile for many "miners" after halving, as the value of the bitcoins received will no longer cover the electricity costs. This is because the necessary computing power ("hashrate"), which miners throw into the network around the clock, has only known one direction since summer 2021: upwards.
The amount of electricity pumped into the Bitcoin blockchain is now just under 160 terawatt hours. According to Digiconomist's Bitcoin Energy Consumption Index, this is roughly equivalent to the annual electricity consumption of Malaysia.
The data portal puts the resulting CO2 emissions at just under 88 million tons of CO2 per year, which is comparable to the emissions of Chile. According to federal figures, air traffic in Switzerland produces around 5.5 million tons of CO2 per year.
New all-time high?
However, these figures are likely to be of secondary importance to most investors. Above all, they expect the "halving" to result in even higher share prices. This is because the last three halvings have each resulted in considerable increases in value. However, this effect weakened again after each cycle.
Many market observers therefore assume that even after this halving, a tighter supply of new bitcoins is likely to drive up prices. However, the increase could be even lower than before.
In contrast to the last event four years ago, however, the market has also changed fundamentally, as the Swiss crypto company 21Shares writes. Bitcoin ETFs could "significantly change" the supply and demand dynamics. Given the robust demand for ETF products to date, a supply shortage caused by halving could increase the upside potential.
However, in the shorter term, i.e. before and immediately after the halving, market experts expect high volatility and a certain amount of selling pressure. Matteo Bottacini from Crypto Finance, for example, expects the halving to trigger a "sell the news" reaction.
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