So, Bitcoin Halving Is Done. What Happened and What’s Next?

The highly-anticipated fourth iteration of the bitcoin halving occurred a little after 8:09 p.m. Eastern on Friday. Bitcoin traded flat in the immediate aftermath of the halving, holding steady around $63,000.

After the halving, the rate of issuance of new bitcoin as well as the rewards for successful bitcoin miners are cut in half. There can only be 21 million bitcoin, and fewer new tokens entering circulation could impact bitcoin prices. That’s why, the halving is watched closely by miners and investors alike.

What Happened At This Halving?

After today’s halving, the rate of new bitcoin created roughly every 10 minutes is 3.125. These halving events take place after every 210,000 blocks are validated or roughly every four years and were baked into the network’s design when it was originally launched in January 2009.

After the halving, the block reward or subsidy associated with validating each new block of transactions on the Bitcoin network is cut in half. The block subsidy is the newly-created bitcoin that is included in the block as a reward to the associated miner. So in effect, the block subsidy for successful miners is now 3.125 bitcoin.

In addition to the subsidy, miners also collect any fees associated with the transactions in the block.

The halving block was mined by ViaBTC, and it was the 840,000th block mined on the Bitcoin network. However, it is interesting to note that the successful miner took home a little over 40 bitcoin or equivalent of more than $2.6 million in block subsidy and fees as their reward, according to data from mempool.space.

This fees is much higher than the a little over 7 bitcoin, worth a little more than $450,000 were earned in total fees for successful validation of the blocks that immediately came before the halving block. The reason for this spike is unclear, but perhaps it was people willing to pay higher fees to get their transactions among the 3,050 included in the halving block.

What Happens Next?

In the past, halvings have led to new all-time highs for the bitcoin price in the months following the events. However, this time has been different, as the bitcoin price has already reached a new all-time in the months prior to the halving.

Much of the recent rally was driven by the spot bitcoin exchange-traded funds (ETF), perhaps an indication the demand created by that market may have a greater impact on bitcoin prices than halving events.

According to Kraken Head of Strategy Thomas Perfumo, there is a degree of additional symbolism associated with this halving in terms of the illustration of bitcoin’s apolitical, unwavering monetary policy at a time when many people around the world are having questions about their own currencies.

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“At a time when you have people who are looking at their conventional currencies—inflation, interest rates, and the economic environment they live in—they see this alternative form of currency, bitcoin,” Perfumo told Bloomberg.

However, analysts at JPMorgan and Deutsche Bank said that the impact this of halving was mostly baked into the current bitcoin prices and there isn’t likely to be a large upward movement in the price in its aftermath.

According to these reports, the near-term effects of the halving may be limited to the bitcoin mining sector, where consolidation could occur as overall hashrate declines due to decreased profitability.

That said, there are also indications that miners could have avenues for increased revenue even if the halving does not lead to a price boom. This increased revenue would come via increased aggregate fees from transactions spearheaded by recent developments such as Ordinals and layer-two networks.