Bitcoin’s halving is less than 40,000 blocks awayHere’s what it means

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The Bitcoin network surpassed the 800,000 block on Monday, marking another major milestone in the history of the world’s largest cryptocurrency.

This also means that the next Bitcoin halving event will occur every four years, halving rewards for miners, and is expected to occur at block 840,000 in less than nine months (or 40,000 blocks), according to Bitcoinblockhalf.com.

As we celebrate the mining of the 800,000th block, we find ourselves at a fascinating time in Bitcoin’s life cycle. This is indeed a key step on the road to the next halving, and it certainly adds a layer of excitement to the already vibrant ecosystem, said Matt Prusak, chief commercial officer of Miami-based bitcoin mining firm US Bitcoin Corp.

The 800,000th block was mined at a time when the Bitcoin hash rate, the total computing power used to mine and process transactions on the network, is near all-time highs. Meanwhile, Bitcoin’s mining difficulty, another key metric measuring how difficult it is to find a new block, hit a new all-time high when last adjusted about two weeks ago.

According to Prusak, these two metrics represent an ever-changing dance between technology and the economy, and as the halving approaches, the current trajectory suggests they will continue their upward trend.

This primarily reflects increased competition among miners, as well as advancements in mining technology that contribute to the overall efficiency and security of the network, he said.

Phil Harvey, CEO of digital asset management consultant and data center operations provider Sabre56, shares similar views, saying we can witness similarities to the previous 2020 halving event with only the fittest surviving.

Prior to the halving, the increased hashing power supports continued network growth and robustness. This will only increase by half, reaching all-time highs as miners push to bring miners online, Harvey told Decrypt.

Focus on Bitcoin ETFs

The latest milestone also came amid heightened attention on Bitcoin ETFs, with many in the industry hoping that after years of rejections, the U.S. Securities and Exchange will finally approve the investment tool allegedly highly sought after by U.S. investors.

When it comes to the effect of micro and macro events, such as Bitcoin ETFs and broader regulatory developments, it’s crucial to recognize the complex interplay between these aspects and market dynamics, Prusak said.

According to him, the possible approval of a Bitcoin ETF could indeed be a significant catalyst for the cryptocurrency space, resulting in a more streamlined path for institutional and retail investors to gain exposure to Bitcoin, and therefore potentially increase demand and price.

However, it is important to point out that while these factors may have an impact, Bitcoin’s inherent properties of scarcity, decentralization and immutability have always been its primary value propositions, Prusak added. This is perhaps even more evident as we get closer to the halving event, once again reminding us of the deflationary nature of this asset.

What’s in the Cards for Bitcoin

Despite high investor expectations, Bitcoin’s price dipped below $30,000 on Monday, which Harvey says also has implications for miners at key players in the industry.

The market slowdown means plant expansions are falling short of expectations, due to capital restrictions and precautionary behavior affecting deployment. Many industry players have offline equipment in warehouses and are now scrambling to find partners or facilities to house them, the Sabre56 CEO told Decrypt.

He also recalled that miners’ profits over the past few months have been supported by both rising prices and a sustained increase in transaction fees. However, with the difficulty and increase in hashing power, miners now have a 30-50% margin on trades executed at hosting costs of $0.07-$0.05 per kWh.

As before, the positive revenue from it will be limited after the halving, until the value of BTC increases and the power and difficulty of the hash start to decrease, Harvey said.

US Bitcoin Corps Prusak also pointed out that while no one can predict with absolute certainty what will happen in terms of expectations for the months leading up to the halving, the historical halving events have been times of heightened attention and speculation.

This, combined with current macroeconomic events, could lead to increased market volatility,” Prusak said. “As always, participants should proceed with caution, mindful of the risks associated with such periods of uncertainty.”

Yet, he pointed out, while the industry is indeed navigating uncharted waters, the fundamentals of Bitcoin remain robust.

It continues to be a compelling combination of technology, economics and social dynamics. We’re on the precipice of what could be another transformative period in the life of Bitcoin, one we can’t wait to navigate, Prusak said.

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