Bitcoin’s fourth halving, a highly anticipated event in the cryptocurrency space that happens every four years, has finally happened.
The event reduced the Bitcoin block reward from 6.25 BTC to 3.125 BTC, marking a pivotal moment for the industry. As a result, Bitcoin’s daily issuance has been cut in half, currently at around 450 BTC, compared to around 900 previously. This reduction will continue until around 2140, when the final BTC is mined.
Why is the Bitcoin Halving Important?
The fourth halving, which affected Bitcoin at block 840,000, is significant due to its impact on BTC volatility, which tends to increase after each such event. This is primarily because the available supply decreases, pushing up the value of Bitcoins that have yet to be mined, making them more attractive to investors.
This surge in interest can be seen in the large amount of Bitcoin entering accumulation addresses before the event. In the days leading up to the halving, Bitcoin showed huge volatility, with the price briefly falling below $60,000 before surging to $65,000 — all in the space of a week. At the time of writing, the world’s largest cryptocurrency is trading around the latter.
Typically, halvings slow the pace of supply expansion, though this hurts Bitcoin miners, who face a 50% reduction in block rewards. The adjustment could cause a temporary drop in the Bitcoin network’s hash rate, as miners using older and less energy-efficient hardware may find their operations no longer profitable and choose to shut down.
According to BitIinfoCharts, the network hashrate is currently hovering above 630 Ehash/s, down 13.3% from the peak of 727 Ehash/s in March. After last week's adjustment, Bitcoin's mining difficulty also reached a record high of 86.39 trillion, making mining increasingly difficult.
Satoshi Nakamoto’s Last Words
After the halving was completed, Satoshi Nakamoto’s last words before exiting his social media channels resonated in the community. Bitcoin’s mysterious creator, Satoshi Nakamoto, implemented the halving feature to prevent the permanent erosion of the value of fiat currencies. His vision was rooted in addressing the fundamental flaw of trust inherent in fiat currencies.
“The fundamental problem with traditional currencies is all the trust required for them to work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is littered with violations of that trust.”
It has been a long time since Satoshi Nakamoto's last words, and Bitcoin has come into being. The entire industry has achieved major progress, major upgrades, and major breakthroughs.
On the other hand, the launch of spot and futures ETFs provides investors with the opportunity to buy Bitcoin, enhancing its appeal and acceptance in traditional financial circles. These developments essentially highlight that Bitcoin has evolved from a new concept to a globally recognized asset class that is currently reshaping the future of finance.