Halving Bitcoin: Key Moment for Cryptocurrencies

Bitcoin Halving: Cyclical Phenomenon with Significant Impact on the Cryptocurrency Market

Bitcoin (BTC) halving is a key event that occurs approximately every four years after the mining of 210,000 blocks. It is the moment when the block reward received by miners is reduced by half, having a significant impact on the entire cryptocurrency ecosystem.

Effects of Halving on Miners and the Cryptocurrency Market

The reduction of the block reward during halving causes miners to deal with doubling mining costs, while the earnings per block remain constant. According to data from CryptoQuant’s CEO Ki Young Ju, the current cost of mining using Antminer S19 XPs will increase from $40,000 to as much as $80,000. The average cost of mining bitcoin currently fluctuates around $49,902, and with the BTC price surpassing $70,000, the situation becomes even more dynamic.

Historical Price Increases Post-Halving

After each halving, the price of bitcoin typically experiences a significant increase. For example, after the 2012 halving, the price rose by around 9000%, in 2016 by 4200%, and in the recent 2020 halving by 683%. This generates great interest among investors and speculators seeking opportunities to profit from this cyclical phenomenon.

Uncertainty and Market Reorganization Post-Halving

However, halving also renders many mining machines obsolete, as they are unable to compete with the growing demand for computing power. Following halving, there is a period where the BTC price is below the profitable threshold for miners, leading to increased sales of mining devices and the exit of smaller players from the market. This, in turn, creates uncertainty about the market’s future development.

Increased Demand and Bitcoin Price

Despite these challenges, as demand rises and market supply diminishes, the price of bitcoin often increases, surpassing even the average mining costs for miners. This encourages further market activity and serves as motivation for existing and new cryptocurrency market participants.

Bitcoin Halving is a phenomenon not only observed by cryptocurrency traders but also by the entire financial market. Its effects make it a time of intense observation for all those interested in the field.