With 2024 already underway, anticipation in cryptocurrency circles is reaching fever pitch as everyone braces for the Bitcoin halving – an event that could reshape the market landscape. It's worth considering, as this event has historically sparked transformative waves across the cryptocurrency landscape. Knowing what we've learned from previous halvings, we're ready to move forward with a keen eye, and make sure our moves are shaped by those insights. But is this next half different? Let's find out.
From Digital Gold to Rare Platinum: Bitcoin's Story of Increasing Scarcity and Value
The design of Bitcoin revolves around making BTC less available over time, while keeping inflation under control. There is an all-time cap of 21 million Bitcoins, and we have already reached 19.62 million. The scarcity of Bitcoin, with its very limited release on the market, is a major reason why people call it “digital gold” – as both of these assets have a “hard to get” quality.
When thinking of the Bitcoin blockchain as a ticking clock, we can see that halving occurs every 210,000 blocks, or roughly every four years, with the reward for mining new blocks cut in half. It's been this way since Bitcoin's launch in 2009, starting at 50 BTC per block and heading to 3,125 BTC in 2024.
The stock-to-flow ratio, which compares current supply to upcoming new coins, shows that Bitcoin is about to become scarcer than a platinum album. By 2032, after the halvings in 2024 and 2030, Bitcoin will become more scarce, so it will be more of a gem than gold.
Bitcoin growth patterns after the halving
Let's take a look at Bitcoin's memory lane. After each halving, the price of Bitcoin increased dramatically. After the 2012 halving, after just 100 days, the market capitalization had risen by 342%. Even more impressive, the peak price reached a staggering $1,152 the following year, a jump of 8,761%. Fast forward to 2016: rewards were halved from 25 to 12.5 BTC, and the price rose to $17,760 the following year, a 2,572% jump. The last halving in 2020 saw the reward drop to 6.25 BTC, and the price of Bitcoin did not disappoint, reaching $67,549 the following year, representing a strong growth of 594%.
If we play mathematicians for a while, we can look at how Bitcoin's growth rate declined after the last halving — by 70.64% from one halving to the other and by 76.91% from two to three — and average out these declines to arrive at a growth rate. A decrease of 73.78%. We then apply this to the 594.03% growth after the third halving and – voila – we get a speculative growth rate of 155.79% after the halving in 2024. This means that Bitcoin will likely reach around $111,807 within a year to a year and a half after the halving. Next. But let's be clear: This is all just speculation and certainly not something to base your investment decisions on.
Miners survive the fittest
For Bitcoin miners, the halving in 2024 will be an uphill battle. With bonuses cut in half, miners working with outdated equipment and facing high electricity bills will find themselves between a rock and a hard place. In Italy, for example, mining a single bitcoin can cost the equivalent of a luxury Lamborghini Huracan or a Porsche 911 Turbo S, with costs rising to $208,560.
The halving in 2024 will transform the mining landscape into one reminiscent of the Hunger Games, where only the strongest miners, armed with the most efficient technology and access to affordable energy, will be able to survive. This half will serve as the ultimate arena, a test of strategy and resilience, where only those equipped with smart, cost-effective tactics will emerge as victors on the competitive battlefield.
Concluding thoughts
So, the Bitcoin halving in 2024 is about to shake things up seriously, with big changes to mining operations and a potentially huge swing in the price of Bitcoin. The upcoming halving event blends powerful economic theories with cutting-edge technical moves, all wrapped in the unmistakable appeal of cryptocurrencies. Whether you're mining, hanging out, or just watching from the sidelines, bring your own popcorn – this one will be in the books!
This is a guest post by Maria Carolla. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
