Bitcoin Halving Makes Its Fourth Appearance! How Much More Will the Coin Price Rise? Will Miners Face Unemployment? A Comprehensive Analysis of the Two Major Impacts.

Updated on April 20, 2024: Bitcoin Completes Halving
On the morning of April 20th, at 8:09 am, Bitcoin (BTC) successfully completed its fourth halving, reducing the future block rewards from 6.25 BTC to 3.125 BTC. After the halving, the price of Bitcoin fell to around $63,900 and is currently fluctuating around $64,000 as of the time of writing.
According to the blockchain browser Mempool, the last block with a reward of 6.25 BTC, also known as block 839,999, was mined by SBI Crypto, while the first block to receive the halved reward was mined by the ViaBTC mining pool.
A once-in-four-years event! What is Bitcoin Halving?
Bitcoin (BTC) reached a historical high of over $73,000 in March this year. The upcoming Bitcoin halving event in April is expected to have a profound impact on the value of Bitcoin, miners’ earnings, and the entire cryptocurrency market.
Bitcoin halving means that approximately every four years, the number of Bitcoin rewards that miners can obtain will be halved. This rule is programmed and cannot be modified. Its purpose is to effectively control the rate of new coin issuance and scarcity. The halving event has already occurred three times, and the upcoming event in April will be the fourth.
When Bitcoin’s creator, Satoshi Nakamoto, published the Bitcoin whitepaper in 2008, he set the upper limit of Bitcoin at 21 million coins. In the Bitcoin blockchain network, people responsible for verifying transactions are called miners. They receive Bitcoin as a reward for completing their tasks, a process known as mining.
When the number of circulating Bitcoins reaches 21 million, mining and halving will end. According to the current calculation, this is expected to happen around 2140. After each halving event, the value of Bitcoin tends to experience significant growth within 6 to 18 months, causing a bull market in the cryptocurrency market.
Therefore, not only miners are affected, but investors also closely follow the aftermath of Bitcoin halving.
How does Bitcoin halving affect miners?
Since Bitcoin’s inception in 2009, there have been three previous halvings in 2012, 2016, and 2020. With the upcoming fourth halving in April, the mining reward for Bitcoin has decreased from the initial 50 BTC to 3.125 BTC.
The first impact is that mining becomes less profitable. Bitcoin researcher Chen Bowei pointed out that the halving is a significant blow to miners. In 2013, there were already academic papers suggesting that Bitcoin’s economic model would not be able to sustain itself in the future because the rewards for mining a block were insufficient to cover the costs for miners. As a result, the number of miners would decrease over time.
In this situation, there are two possible scenarios for the future development of Bitcoin. In the first scenario, as Bitcoin adoption accelerates and more people use Bitcoin, transaction fees, which are an important source of income for miners, will increase. Even if mining becomes more difficult, miners can still survive. In the second scenario, the scarcity of Bitcoin leads to a significant increase in its value. If the price of Bitcoin doubles or more after the halving, mining can still be profitable for miners.
Shift of applications to Layer 2 to create a healthy blockchain environment
However, as more people enter the Bitcoin blockchain world, transaction fees will rise, and speed will slow down due to the increased number of users. The emergence of Layer 2 solutions, which address existing issues in the blockchain, can significantly improve user experience. Therefore, Chen Bowei believes that the final form of the Bitcoin blockchain will move towards a stable balance, with Bitcoin investments happening on Layer 1 and applications shifting to Layer 2.
If Bitcoin adoption continues to increase, with more people using Bitcoin, transaction fees will rise. Even if mining becomes more difficult, miners can still survive. When the Bitcoin Layer 2 ecosystem flourishes and attracts a large number of users, transaction fees on the Layer 1 network will increase significantly. At that time, stable transaction fees alone can sustain miners, creating a truly healthy blockchain environment where the halving event is no longer a concern.
Observation indicator: How much money will Bitcoin ETF bring in?
An important observation indicator for this halving event is how much money the Bitcoin ETF will bring in. Lin Hongyu, a cryptocurrency lawyer who has been persistently buying Bitcoin on a daily basis during bear markets, expressed confidence in this market cycle, expecting a price surge similar to the previous three halvings.
Bitcoin believers often see Bitcoin as a challenge to central institutions and traditional financial systems and have a certain level of confidence in it, rather than just pursuing short-term profits. However, general investors may focus more on the investment returns of Bitcoin.
In any case, the saying “investing involves risks” applies, and it depends on individual risk tolerance.