What is Bitcoin Halving: Effects of Halving, Is a Bull Run Expected After the 2024 Halving?

As the Bitcoin halving approaches, the cryptocurrency market is preparing for a major event. Although historical data shows that halvings have significantly increased the price of Bitcoin, reduced revenues for miners and rising costs could pose serious challenges.

The Bitcoin halving scheduled for April 2024 is the second most significant event awaited by the cryptocurrency market, Bitcoin miners, investors, and many companies following the approval of spot Bitcoin ETFs.

What is Bitcoin Halving?

Bitcoin halving is a mechanism in the Bitcoin blockchain that reduces the Bitcoin reward miners receive for each block they solve by half after a certain number of blocks have been produced. This process is embedded in Bitcoin’s original design and occurs every 210,000 blocks. The primary purpose of the halving is to keep the supply of Bitcoin under control and to act as a measure against inflation.

Miners secure the Bitcoin network and verify transactions by solving complex mathematical problems, and they receive Bitcoin rewards for their efforts. The halving reduces the amount of this reward, slowing down the rate at which new Bitcoins are introduced into the market. This helps maintain the limited total supply of Bitcoin and thus supports its value.

Effects of the Halving, What Happened in Past Halvings?

The halving, which cuts mining block rewards in half, brings significant challenges to miners’ income and profitability. Miners with high operational costs, especially if the Bitcoin price does not increase significantly, may struggle to remain profitable.

However, a pattern observed in past halvings shows that the reduced supply following the halving can increase Bitcoin prices, potentially compensating for the decreased block rewards. Nevertheless, the correlation between Bitcoin prices and the valuations of mining companies can lead to high volatility. Some mining companies report improvements in operational efficiency and mining capacity, which could mitigate the impact of the halving on profitability.

Bitcoin Bull Run Expectations, Could a Bull Run Follow the Halving?

In terms of Bitcoin price projections and market dynamics, significant bull runs in Bitcoin prices have been observed following previous halvings. For example, after the 2016 halving, the price rose from around $650 to approximately $20,000 by the end of 2017. Four months before the 2024 halving, Bitcoin has shown a 207% increase from its bottom, but this growth remains more conservative compared to pre-halving increases in previous cycles.

Profitability Crisis After Halving: Cantor Fitzgerald Analysis

The Bitcoin mining industry is undergoing a challenging period ahead of the Bitcoin halving scheduled for April. Sales worth millions of dollars by some mining companies have been observed.

According to Cantor Fitzgerald’s analysis, if Bitcoin’s price does not show significant growth after the halving, 11 of the largest publicly traded Bitcoin miners could struggle to mine profitably. This situation, as indicated by CleanSpark board chairman and co-founder Matthew Shultz, could put operational pressure on many Bitcoin miners such as Marathon Digital, Riot Platforms, and Core Scientific. With the halving reducing mining rewards by half, miners may find it harder to cover their increasing operational costs.

Market experts and commentators anticipate a significant increase in Bitcoin’s price in the months following the halving. Historically, a reduction in supply tends to increase Bitcoin’s price in the long term. However, this situation could pose challenges for miners with high operating costs, especially if the Bitcoin price does not reach a level sufficient to cover these costs…

Previous Article

Polygon Competes with Ethereum in User Numbers; Bitcoin is Right Behind

Next Article

The Impact of Bitcoin Halving on Mining Profitability: A Cantor Fitzgerald Analysis

Related Posts
Read More

What is Devaluation?

Devaluation is an economic tool whereby a country intentionally lowers the value of its currency in an attempt to balance its trade deficit. However, if the currency remains undervalued for an extended period, it can pose risks of inflation and instability.
Read More

Security in Web3: Things to do for Safety

In its ideal form, Web3 wouldn’t rely on any central authorities or servers, and users wouldn’t have to trust as many third parties. However, despite its lofty aspirations, Web3 cannot entirely eliminate trust or reliance on central authorities in practice.