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As 2024 approaches, expectations in the cryptocurrency realm have reached a fever pitch, as everyone gears up for the Bitcoin halving—an event that could reshape its market landscape. Historically, this event has sparked transformative waves in the cryptocurrency sphere, warranting close attention. Armed with insights from past setbacks, we look forward with keen eyes to ensure our actions are informed by these perspectives. But what sets the upcoming halving apart? Let's find out.
From Digital Gold to Rare Platinum: The Story of Bitcoin's Scarcity and Escalating Value
Bitcoin's design is such that over time, its availability decreases, thus controlling inflation. The limit for Bitcoin is 21 million coins, of which we've reached 19.62 million. The scarcity of Bitcoin and its strict limitation in the market are key reasons why it's dubbed "digital gold," as both assets possess the quality of being "hard to come by."
Viewing the Bitcoin blockchain as a ticking clock, we can see that every 210,000 blocks, or roughly every four years, the reward for mining new blocks halves. Since Bitcoin's inception in 2009, it has been this way, starting from 50 bitcoins per block and decreasing to 3.125 bitcoins by 2024.
Stock-to-flow ratios compare existing supply with upcoming new coins, indicating that Bitcoin is set to become rarer than platinum records. By 2032, after the halvings in 2024 and 2030, Bitcoin's scarcity will skyrocket, making it more akin to a gemstone than gold.
Source: LookIntoBitcoin
Bitcoin's post-halving growth pattern takes us down memory lane. After each halving, the price of Bitcoin tends to soar. Following the halving in 2012, just 100 days later, the market cap exploded by 342%. More impressively, the following year saw a staggering peak price of $1,152, marking an 8,761% surge. Fast forward to 2016: after the reward halved from 25 BTC to 12.5 BTC, the price skyrocketed to $17,760 the next year, a 2,572% increase. In the most recent halving in 2020, with the reward reduced to 6.25 bitcoins, Bitcoin's price didn't disappoint, reaching $67,549 the following year, steadily growing by 594%.
If we indulge in the mathematician's game of speculation, we can see how Bitcoin's growth rate declines after experiencing several halvings—from the first to the second halving, a 70.64% decrease, and from the second to the third halving, a 76.91% decrease—and averaging these declines, it's a 73.78% growth rate drop. Then, factoring in the 594.03% growth rate after the third halving, voilà, our speculative growth rate after the 2024 halving is 155.79%. This suggests that Bitcoin may reach around $111,807 in the one to one-and-a-half years following the imminent halving. But let's be clear: this is all speculation and by no means the basis for your investment decisions.
Survival of the Fittest for Miners
For Bitcoin miners, the 2024 halving will be a tough battle. With rewards halving, miners operating with outdated equipment and facing high electricity costs will find themselves in a dilemma. For instance, in Italy, the cost of mining one bitcoin amounts to $208,560, equivalent to a luxury Lamborghini Huracán or Porsche 911 Turbo S.
Source: CoinGecko
The 2024 halving will turn the mining landscape into a scene reminiscent of "The Hunger Games," where only the strongest miners with the most efficient technology and affordable energy can survive. This halving will be like the ultimate arena, testing strategies and resilience, with only those equipped with savvy, cost-effective tactics emerging as winners on the competitive battlefield.
Closing Thoughts
Thus, with significant shifts in mining operations and the potential for significant price fluctuations in Bitcoin, the 2024 halving will drastically alter the landscape. The upcoming halving event will blend harsh economic theory with cutting-edge technological advancements, all shrouded in the tantalizing allure of cryptocurrency. Whether you're mining, spectating, or simply on the sidelines, grab your popcorn—this is one for the history books!
This is a guest post by Maria Carola. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Bitcoin Halving
Author: Maria Carola |
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Post time 26-2-2024 07:43:01