What Happens After Bitcoin Halving & Tips for Miners' Success

In the months leading up to a Bitcoin halving, everyone is excited about the event and its immediate effects on the market. What happens after Bitcoin halving? What is Bitcoin halving? In the case of the most recent halving event on 19 April, 2024, there were significant price surges both before and after the event, with the price of Bitcoin rising to over $105,000 in the months following the halving. There were also some less-known effects that, while they did not affect the price directly, profoundly impacted the mining ecosystem that underpins the Bitcoin network. This article will explore the immediate and long-term effects of the Bitcoin halving on the market and mining operations and actionable strategies for miners to remain profitable and thriving in the post-halving environment.

As miners navigate the difficulties of the post-halving environment, Bitcoin Magazine Pro's Bitcoin analysis can help by offering valuable insights to help them achieve their objectives.

What Happens After Bitcoin Halving?

Bitcoin and BTC Chart - What Happens After Bitcoin Halving

Bitcoin has a capped supply and will only ever produce 21 million tokens. Halving events reduces the speed at which new Bitcoins are released into circulation.

Every time 210,000 blocks are added to the Bitcoin blockchain, the reward offered to miners for validating a block of transactions is cut in half. This process creates a deflationary effect that helps bolster the value of Bitcoin over time.

The Science Behind Bitcoin Halving

Bitcoin was the first digital currency built on blockchain technology, which involves creating “blocks,” or records of information added to the blockchain. This process is known as mining.

Bitcoin runs on a proof-of-work consensus mechanism where miners validating transactions are rewarded with newly minted Bitcoin. Miners compete to use computer algorithms to solve complex numerical puzzles, validating a new block on the Bitcoin network roughly every 10 minutes.

Bitcoin Halving: Controlling Supply and Reward Dynamics

The Bitcoin blockchain is designed so that a halving event occurs every time 210,000 blocks are added. When miners add every 210,000 blocks to the chain, they automatically receive only half the number of Bitcoin as a reward. While this proof-of-work mechanism is critical for preventing fraudulent transactions and controlling inflation, it also works towards another key component of Bitcoin:

It's Limited Supply

As mentioned earlier, the maximum supply of Bitcoin has been fixed at 21 million, and roughly 19.5 million Bitcoins have already been mined. Considering all upcoming halvings occurring every 210,000 blocks (or roughly four years), the last Bitcoin will be mined around 2140.

Only 1.5 million Bitcoins will be created in the next 116 years. This means that inflation will be very marginal from a technical standpoint. Halving keeps the miners' incentive alive for longer and delays the minting of the final Bitcoin while contributing to its anti-inflationary fixed-supply ethos.

Market Dynamics: Is Halving a Good Thing?

Historically, there have been four halving events since Bitcoin’s inception, including the last one on April 19th, 2024.

Year	Mining Reward (BTC)
2009	50
2012	25
2016	12.5
2020	6.25
2024	3.125
2028	1.56
2140 (approximately)	0.00000001

Every reduction in rewards aims at maintaining the value and scarcity of Bitcoin, and historically, the lead-up to and aftermath of these events usually increases its market value. The increase is largely due to a slight decrease in supply, creating a shortfall of sorts if demand increases or even stays the same. Since the entire alternative currency ecosystem is closely connected to Bitcoin, the halvings tend to kickstart a new growth phase for the entire market.

Impacts of Bitcoin Halving on Mining and Sustainability

One is the mining process, with halving rewards impacting profitability due to unsustainable operational costs for miners. This could also potentially increase the chances of a 51% attack, where miners/a mining pool controls more than 50% of the network’s computing power or mining hash rate. It could potentially lead to double spending attacks and disruptions.

The good thing about a halving event and lesser mining rewards is Bitcoin’s lesser energy consumption and environmental footprint, which has always been a concern and criticism. Since the rewards are slashed by half, miners would want to lower energy costs by considering energy-efficient mining techniques to stay profitable. This trend could reduce the overall environmental impact by lowering the average energy consumption per transaction.

Risks and Challenges Surrounding Bitcoin Halvings

Person Trading on Laptop - What Happens After Bitcoin Halving

Bitcoin halvings often lead to wild price fluctuations, and the aftermath can be as turbulent as the lead-up. While many investors anticipate a long-term bullish trend, the short-term volatility can be challenging to navigate.

Traders positioning themselves ahead of a halving can cause sudden surges in Bitcoin’s price, but profit-taking afterward might lead to equally rapid declines.

Speculative Bubbles: The Hype and the Risks of Chasing Returns After Bitcoin Halving

After every halving, Bitcoin gets a lot of media attention. While it’s not clear how much this helps the long-term fundamentals of the network, it certainly attracts the attention of inexperienced traders chasing quick returns. This influx of speculation can inflate prices beyond sustainable levels, increasing the risk of market corrections once the excitement fades.

Will Bitcoin Halving Lose Its Impact Over Time?

Bitcoin halving events have historically led to bullish runs lasting for years. However, critics argue that the halving narrative may lose impact over time as the market matures. With halvings widely anticipated, their effects might be increasingly priced in, reducing their influence on Bitcoin’s value.

Bitcoin Halving and Regulatory Scrutiny

Halvings tend to amplify Bitcoin’s visibility, which can invite heightened scrutiny from regulators. Unclear or restrictive regulatory developments during or after a halving could dampen market sentiment.

Miners' Post-Halving Survival Guide

Bitcoin Logo - What Happens After Bitcoin Halving

Cutting down on costs is one of the ways to maintain profitability after Bitcoin halving. One practical option is renting hashing power or mining hardware remotely. The popularity of cloud mining technology has skyrocketed lately for this very reason. When you opt for cloud mining, you purchase a contract with the desired conditions on the provider’s website or app.

In exchange for regular fixed payments from your side, the provider’s staff will take full care of your rig. You’ll be making a profit on the BTC price growth. The other way around is to rent at ASIC remotely. You won’t need to maintain it or find a place to locate this noisy machine. It will be easy for you to select the rig with the desired parameters.

Access Cheap Electricity to Stay Profitable

With every Bitcoin halving, miners receive fewer rewards for their efforts. This trend increases the importance of cutting costs to maintain profitability. And since electricity consumption is the biggest expense when mining Bitcoin, finding power at affordable rates is crucial.

A reliable provider can also grant you access to cheap energy. Such companies tend to place their facilities in special economic zones with optimal conditions for miners.

Let’s Consider The Well-Known Ecos Brand as an Example

This provider is headquartered in the free economic zone in Armenia. The national government entirely approves of Bitcoin.

The residents of the zone are exempt from any taxes and customs duties for 25 years. The Hrazdan power station, situated close to the provider’s facilities, ensures a stable and cheap energy supply.

Ecos Offers Turnkey Services for Miners.

You start by choosing an ASIC from a trustworthy manufacturer. The ECOS team will legally import it into the free economic zone, clear the customs, and handle every logistics step. Your hardware will be placed in a safe location with a 6-month warranty. Armed guards will be protecting the territory 24/7. The ECOS team will fine-tune the rig to ensure its maximum performance.

Skilled and Knowledgeable Staff

Will be responsible for your ASIC’s maintenance. If the machine breaks down, ECOS will repair it in their service center. You won’t have to transport your miner anywhere and it will be able to get back to work very soon, generating income for you.

The ECOS specialists can connect your ASIC to one of the best pools of your choice, such as:

BTC.com
ViaBTC

The ECOS professionals will rely on their custom performance management system to monitor mining efficiency. You’ll be able to access it through your user account.

Get the Most Powerful ASIC on the Market

It’s essential to get an ASIC of the latest generation. Compared to their predecessors, the newest miners consume less power and boast a much higher hashrate. Such a combination can enable you to stay profitable after halving.

Let’s have a look at the profitability forecasts of Antminer S21.

It’s the newest model in the product range of Bitmain, one of the global leaders in the ASIC manufacturing niche. The calculations depend on where you place your hardware, so imagine it’s hosted at the Free Economic Zone of Armenia (ECOS). The assessment is based on post-halving FPPS (0,0000008 BTC per 1 TH per 24h). The costs of all hosting expenses have been considered in the forecast. With the BTC rate hitting $120,000, it will be possible to gain $23,000 during the device’s lifetime. With the BTC rate hitting $150,000, your gain will reach $31,000.

The only shortcoming of the Antminer S21 is its price. One machine costs around $6,000. If you are not ready to pay this sum upfront, alternative ways exist to benefit from it. You can rent it remotely or resort to cloud mining services, as mentioned above. The above-mentioned ECOS provider supports both options.

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What Happens After Bitcoin Halving & Tips for Miners' Success

22 de diciembre de 2024