Why you should be starting to prepare for this major milestone.
It’s hard to believe that it has already been two years since the beginning of the last crypto-market bull run, which led to Bitcoin hitting its all-time high of roughly $69,000.
When you consider how quickly time flies (cliché, I know), you can forgive me for already bringing up the 2024 Bitcoin Block Reward Halving.
Forget about the Olympics (sorry, athletes); this is the event to watch every four years.
Before continuing, let’s cover what this all entails.
What is the Bitcoin block reward halving?
- When you mine a Bitcoin block, you receive BTC rewards.
- This event is an ongoing halving of Bitcoin rewards received per block mined. As shown in the featured image, this started at 50 BTC per block, with each block produced approximately every 10 minutes.
- After 210,000 blocks are mined (approximately every four years), the reward offered to miners drops by 50%. This translates to 50% fewer Bitcoins entering circulation per 210,000-block period.
- It also means that Bitcoin’s inflation rate is cut in half each time this event occurs, bringing it lower than almost every country globally.
- The next (i.e., upcoming) Bitcoin halving event is scheduled to occur at block height 840,000, which will be on Friday, 26 April 2024, though this could change.
- The halving will continue until all of the 21 million BTC have been mined (max supply), which, at current rates, is scheduled to occur by 2140.
Why you should be paying attention
Each halving event generally represents the start of a bull market 6–9 months afterwards if history is anything to go by.
Consider the following info:
Notice how November to December, every four years listed above were bullish for Bitcoin. This is a major reason why crypto commentators frequently mention that 2025 will be an incredible year for Bitcoin.
To help you visualise this price growth over time, I have also included the BTCUSD price chart since 2012, including BTC’s price at each halving date.
What about altcoins? Many have not just benefited as much as Bitcoin but have rallied harder than the foundation of crypto.
One (but not the only) logical explanation for this is that once we enter another bull run, all of the hype returns to the space, with a lot of the general public thinking that they have missed out on gains from Bitcoin and, as a result, aim to amass significant profits from altcoins.
If history were to repeat itself, then this would translate to some insane prices for Bitcoin.
Big-end of town having a whale of a time
Bitcoin whales have been actively accumulating over the past 12 months, taking full advantage of paper hands (i.e., anyone willing to sell at the drop of a hat) disposing of their BTC.
WhaleAlert on Twitter is one of the primary sources used by people monitoring transaction activity across multiple blockchain protocols, which has been doing so since 2018.
We’re talking about millions of dollars of crypto and stablecoins being transferred from one wallet to another, between exchanges and non-custodial wallets.
In terms of Bitcoin, several blockchain-analysis websites consider both active wallet addresses regardless of BTC holdings and those with a balance over 1,000 BTC, as shown below.
Fortunately, the number of addresses with enormous amounts of Bitcoin (>1,000 BTC) peaked at roughly 2,500 in 2021. This currently sits at 2,024 addresses, based on stats from BitInfoCharts.
It is a positive trend for the broader Bitcoin community to see the circulating supply of Bitcoin distributed across a greater number of Bitcoin wallets.
There is also the matter of having Bitcoin mining hash rate (i.e., computing power for miners) distributed across more countries worldwide to combat China’s dominance in this space until May 2021.
Nonetheless, crypto whales will still be enjoying their loaded BTC bags, particularly with the expectation of another bull run sometime next year or early 2025.
Crypto miners planning ahead
Crypto mining firms have also been gearing up for the major drop in Bitcoin block rewards, effectively making it 50% less profitable to mine the foundation crypto, assuming a steady price and no gains in energy efficiency (watts per terahash).
Of course, we know that any successful company needs to find ways to be more productive, and this is paramount for any large-scale crypto miner aiming to stay afloat, especially with this highly volatile asset (class).
I remain optimistic about Bitcoin’s outlook, particularly with the increasing scarcity, a constant increase in active addresses (chart included below), more countries contemplating using BTC as legal tender, and clearer regulations for crypto trading, thus opening up BTC buying and selling to more people worldwide.
Experienced crypto mining companies will have started implementing greater efficiency measures to compensate for the 50% reduction in mining rewards. Competition amongst mining companies and a greater push for cleaner sources of energy (renewables, nuclear, and improved cooling technologies for mining equipment) will all help lower operational costs; the latter being useful.
If you haven’t already, I will start by getting some skin in the game and accumulating small amounts of Bitcoin, a.k.a. “staking sats”.
Regardless of what happens with the multiple crypto lawsuits in the USA (let alone abroad) and the proliferation of CBDCs, Bitcoin is here to stay and is widely regarded as the most decentralised cryptocurrency out there, with over 17,100 reachable Bitcoin nodes active on the network.
Adding to Bitcoin’s built-in scarcity is that over six million Bitcoins have been lost forever, with one of the most famous stories relating to this being the Welsh man who discarded a hard drive with about 7,500 BTC back in 2013.
Considering this, there is an even greater impetus to hold some Bitcoin when factoring in the 2024 Bitcoin Block Reward Halving and this asset class becoming more established by the day.
- N.B. None of this is financial advice; I am not a financial advisor. You are solely responsible for crypto investments, let alone in any asset class.
- Bitcoin accounts for about 20% of my overall crypto.
- The opinions expressed within this piece are my own and might not reflect those behind any news outlet, person, organisation, or otherwise listed here.
- Please do your research before investing in any crypto assets, staking, NFTs and other product affiliated with this space.