At 7:09 a.m. Vietnam time this morning, the Bitcoin network completed its fourth halving at block height 840,000, halving the miner reward from 6.25 to 3,125 Bitcoin, pushing up network transaction fees at one point. increased to record levels.

The cryptocurrency community witnessed Bitcoin's fourth halving event, marking an important milestone in the development journey of the world's leading cryptocurrency. After the halving, Bitcoin transaction fees saw a record increase, surpassing the $240 mark per transaction and bringing significant profits to mining pools, according to data from mempool.space.

The increase in fees is believed to be due to a post-halving spike in transactions, which clogged the Bitcoin network. Currently, there are more than 234,000 pending transactions, equivalent to about 241 blocks of data.

This situation has brought huge profits to mining pools. In just a few hours, major mining pools such as Viabtc, Foundry, Braiins Pool and Antpool raked in millions in transaction fees. Typically, Viabtc obtained 37,626 Bitcoins (equivalent to 2.39 million USD) when mining block 840,000.

The market fluctuates before the halving

Ahead of the halving, Bitcoin has experienced significant fluctuations. According to Coin Metrics, Bitcoin price has dropped about 4% in the past week, trading around $64,100.

Although halving does not directly affect Bitcoin price in the short term, history shows that after each halving, Bitcoin price often increases sharply. Specifically, after the halving events in 2012, 2016 and 2020, Bitcoin price increased about 93 times, 30 times and 8 times respectively compared to the price at the time of halving.

However, analysts from JPMorgan and Deutsche Bank said that this halving was somewhat predicted by the market and reflected in the price. Therefore, the possibility of a sudden price increase like previous times is not high.

On the other hand, JPMorgan analyst Nikolaos Panigirtzoglou sees Bitcoin to fall in the short term, as market conditions are overbought and Bitcoin prices remain higher than gold when adjusted for volatility. Especially when the flow of venture capital money into cryptocurrency projects has decreased sharply.

Meanwhile, Deutsche Bank analysts expect Bitcoin prices to remain anchored at high levels going forward, based on momentum from spot Ethereum ETF approvals, interest rate cuts from central banks and developments about regulations.

Challenges mount for the mining industry

Halving also poses a big challenge for Bitcoin miners. The halving of the block reward means that the industry's revenue will also decrease accordingly. JPMorgan predicts the halving will “trigger a wave of consolidation and closures,” creating fiercer competitive pressure among remaining miners. Only companies with large scale and low costs can survive and grow in this competitive environment.

Shares of Bitcoin mining companies have also experienced sharp fluctuations recently, reflecting investor concerns about the impact of the halving. CNBC said that many companies have recorded double-digit declines from the beginning of 2024 until now, after increasing from about 300% to 600% in 2023.

Meanwhile, the Financial Times assesses that the block reward reduction will put pressure on the profits of mining companies, forcing them to look for alternative solutions to maintain business operations. Many companies have been hoarding Bitcoin in the hope that future increases in value will compensate for decreased revenue. However, this is only a temporary solution. In the long term, mining companies need to find more sustainable sources of income.

In addition to block rewards, miners also collect transaction fees on the Bitcoin network. However, this source of income is currently insignificant compared to the block rewards. For transaction fees to become a major source of income, there needs to be a significant increase in the number of transactions on the Bitcoin network.

Ordinals: A ray of hope for the future of Bitcoin and the mining industry

To compensate for the decrease in revenue from block rewards, miners are betting on the growth of the Bitcoin network and the development of new applications on this blockchain. The more transactions on the network, the higher the transaction fees, creating additional revenue for miners.

The emergence of Ordinals, a protocol that allows the creation of NFTs on the Bitcoin blockchain, has breathed new life into this network. Data from CCData shows that, since Ordinals launched in January 2023, the number of daily transactions on the Bitcoin network has doubled, from about 250,000 to more than 500,000. This shows the huge growth potential of the network and Ordinals' ability to become an important driver of Bitcoin's growth.

Although the future of Ordinals and similar projects remains unknown, the growth of the Bitcoin network and growing interest from the traditional finance industry suggest Bitcoin's great potential in the long term. The halving may be a challenge in the short term, but it also opens the door to a new era of Bitcoin, where value is driven by development and practical application.

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