Summary
The upcoming Bitcoin halving will reduce the supply subsidy from 6.25 BTC per block to 3.125 BTC per block. This halving occurs every four years and is crucial for Bitcoin’s finite supply of 21 million coins. In the past, halvings have correlated with a significant increase in the price of Bitcoin, cushioning the impact on miners. However, if the next market cycle does not see a significant price increase, this halving could negatively affect existing miners. As a result, fee revenue from transactions becomes more important for miners’ sustainability. The introduction of Ordinals Theory, which assigns rarity values to specific satoshis, adds a new dynamic to this halving. Miners may fight over the first block of the halving cycle, as collectors may value it at a higher price than the coinbase reward itself. The outcome of this battle depends on the potential market value of the “epic” sat. Overall, this halving has the potential to be more interesting than previous ones and may impact future halvings as well.
Key Points
1. The fourth Bitcoin halving is approaching, which will reduce the Bitcoin supply subsidy from 6.25 BTC every block to 3.125 BTC per block.
2. The halving events are a fundamental shift in Bitcoin incentives, as miners transition from being funded by newly issued coins to being funded mainly by transaction fee revenue.
3. This upcoming halving could have a negative impact on existing miners, as the inflation rate of Bitcoin drops below 1% and the assumption of consistent price appreciation may not hold true. Miners will need to rely more on fee revenue for sustainability.