Will Bitcoin Halving in 2024 Lead to the Next All-Time High, and What Are the Prospects for BTC Mining? With the next halving occurring in April 2024, it's crucial to understand what it is, and how it affects the price and miners alike

In the history of cryptocurrency, some of the most important events in regards to the price of Bitcoin have been Bitcoin halvings. Roughly every four years the reward for mining a new block has been halved, changing the market for both miners and traders. With the next halving occurring in April 2024, it's crucial to understand what it is, and how it affects the price and miners alike.

What is Bitcoin Halving?

In order for the blockchain network to function optimally and as intended, it's necessary to generate new blocks. These blocks are units of information on the blockchain that contain data about transactions made on the network. New blocks are continually mined and added to the blockchain via the process of mining, which requires solving complex mathematical puzzles with the use of high-performance equipment and high energy consumption. In exchange for successfully mining a block, a reward that is fixed by the rules of the network is given out to the miner.

Every 210,000 blocks mined, the amount of the reward is reduced by half, which lowers the influx of new coins into the market. When Bitcoin was created, it was determined to have a finite amount of coins, limited to 21 million, with over 19.6 million BTC having been mined to date. The current reward for each successfully mined block is 6.25 BTC, and it will be halved to 3.125 BTC.

When is the Next Bitcoin Halving?

The exact date isn't pre-set, so it can only be roughly predicted. The next halving is estimated to occur in the latter half of April 2024.

Previous Bitcoin Halvings and Dates

There are currently three Bitcoin halving dates on record, the first happening on November 28, 2012, the second on July 9, 2016, and the most recent on May 11, 2020. When BTC was first released, the reward for mining a block was 50 BTC, which was reduced to 25 BTC in 2012, 12.5 BTC in 2016, and finally 6.25 BTC in 2020. The final Bitcoin is estimated to be mined in 2140, after which all Bitcoins will be in circulation.

On the day of the first halving in 2012, the price of BTC was around $12; almost exactly one year later, BTC hit its all time high at that time of $1,127.45. The second halving saw the BTC price around $650, dropping after the recorded all time high. BTC then soared to another all time high at almost $20,000 in December 2017 after a historic bull run. At the most recent havling in May 2020, the BTC price was around $8,600, and by November 2021 it had shot to another all time high of over $67,000.

According to Blockchain.com data

These price movements can be seen in the Bitcoin halving chart above, which shows the movement of the price of BTC in respect to the previous halvings.

What is The Point of Halvings?

Halvings are baked into the design of Bitcoin, and their main function is to control the supply of new Bitcoin entering circulation. Satoshi Nakamoto, the person or persons who invented Bitcoin, envisioned a digital currency with a capped and controlled supply. This makes it a deflationary asset, meaning its scarcity rises over time.

Making it so that mining rewards are reduced by half slows down the rate at which new Bitcoin is generated over time, which is meant to limit excessive inflation. The goal is to ensure the coin retains its value over time and remains a stable asset.

Halvings have also historically been linked to price increases. While they don't ensure that the price will rise and there are many factors that determine the BTC price, halvings come with the expection of a decreased supply and increased demand, pushing the price upwards.

How Halving Affects the BTC Price

In terms of the effect that halving has on the price of BTC, a pattern has been observed throughout the previous ones. This pattern happens in cycles, ranging from November 2012 to July 2016, July 2016 to May 2020, and the last one has yet to be completed, since it will be from May 2020 to when Bitcoin is next halved.

For each cycle, we see the pattern of the halving giving rise to a new Bitcoin rally, ending with a new historical maximum of the asset price approximately 12-18 months after the decrease in volume of the block reward.

After an observable phase of intense growth in price, the market was then faced with a significant correction every cycle, seeing a peak in 2015, 2018, and the end of 2022. With a new halving on the horizon marking the end of the current cycle, Bitcoin has begun to steadily climb and move towards the newest absolute maximum.

The price has been headed for the $30,000 mark since the beginning of 2023, and broke the $40,000 mark in December 2023 for the first time in a year and a half. While it's not possible to make a finite Bitcoin price prediction, many are hoping to see the first cryptocurrency continue the pattern and break its own record, hitting a new alltime maximum price after the upcoming halving.

How Halving Changes the Mining Industry

In terms of how the halving will affect miners, rewards for mining a block will be reduced, lessening the number of new bitcoins entering the market as well as impacting the entire mining economy.

As with the previous repeated cycles, there is an expected further increase in the value of Bitcoin. Inevitably, this will leave many wondering is bitcoin mining profitable still in the long run. It is likely that smaller mining operations will not find it profitable to continue running. There is a probability that this will bring a temporary drop in the total Hashrate as players in the mining economy are eliminated.

With the decrease in the amount of rewards, in order to keep profits, efficient energy consumption and access to lower electricity prices will become vital. Keeping energy costs low will help retain maximum rewards.

As well as eliminating smaller mining operations, the market will not be favorable for new players as well. Entering the market means buying equipment, finding a place to house that equipment, and all the costs associated with running the operation. With the decrease in rewards, very few may successfully join the market, as the circumstances will make it harder to fit.

Inside a GoMining data center

With this changing mining economy, long-standing mining companies like GoMining are making an effort to continue to provide users with the opportunity to mine BTC simply and efficiently. GoMining is a leading mining company with which users can purchase an NFT that allows them to obtain ownership of a share of computing power of a real Bitcoin miner, held in one of GoMining's nine data centers around the world.

In order to continually provide access for individuals interested in Bitcoin mining across all market conditions, GoMining has an extensive operation that can cope with the changes that a halving brings.

Basically, to start up a mining operation, it takes a lot of time and expertise to purchase, install, and maintain the mining equipment, and it's not possible to start out with a low entry barrier. The lowest power NFT one can own with GoMining is 1 TH/s - which no mining machine even allows - and it starts receiving mining rewards the day after purchase. Mining with GoMining is also highly scalable as you're not locked into your original purchase. In just a few clicks, additional power can be bought and rewards increase immediately after purchase.

Mining operations also come with their own struggles like finding cheap electricity, which is hard for a lot of regions. Digital miners get rid of the need to find cheap electricity. With a real mining farm, the only way to upgrade energy consumption efficiency is to sell off current equipment and buy new equipment. With GoMining, the energy efficiency of each digital miner can be upgraded and improvements take effect at the time of purchase. The energy efficiency of all basic miners from GoMining is 35 W/TH, and the highest available level is 20 W/TH. This is comparable to only some of the most recent devices to enter the market.

Conclusion

The upcoming Bitcoin halving event in 2024 is poised to bring significant adjustments to the established status quo in the BTC mining market. With an increasing importance of efficient energy consumption and access to more affordable resources, smaller market participants may find themselves sidelined as the block reward decreases.

Simultaneously, these impending changes will pave the way for innovation, allowing certain projects to address the growing interest in the industry and navigate the escalating entry barriers that are becoming more formidable each year.