Much remains unknown about Bitcoin’s (BTC) quadrennial halving event, which reduces the block rewards earned by Bitcoin miners by 50%, who play a critical role in validating BTC transactions and securing the system.
Will miners go bankrupt or flee the network? Will the hash rate collapse? Will the price of Bitcoin rise and then fall? Will the halving spur further crypto adoption? And so on.
But this much is certain: Every four years, miners’ block rewards are cut in half — this is pre-coded into the network — and at some point in April 2024, once the 210,000th block is validated, miners’ rewards will fall from 6.25 BTC per block to 3.125.
All halvings are both similar and different, but this year’s could be unique because of the new spot market Bitcoin exchange-traded funds (ETFs), launched in January, which have helped drive the price of Bitcoin to all-time highs, bringing the crypto sector as a whole close to a $3 trillion market capitalization.
This raises yet another question: Given that the Bitcoin ETFs appear to have opened many institutions’ eyes to Bitcoin as an alternate asset, will the April halving accelerate the trend?
Some think so. “Institutions are still learning about this asset class, but understanding the monetary policy of Bitcoin will only drive more interest,” Dante Cook, Swan Bitcoin’s head of business, told Cointelegraph.
The halving is an important demonstration that “Bitcoin security can continue despite a lower ‘security budget,’” Ethan Vera, chief operating officer at Luxor Technology Corporation, told Cointelegraph, adding:
“We expect there to be continued institutional interest in both the underlying commodity and also the companies operating in the space, such as miners.”
For institutions that want to buy the coin itself, cutting the block reward in half is arguably an enticement, added Joe Nardini, senior managing director at B. Riley Securities. It’s more evidence that the BTC supply is not going to balloon, which is a “net positive” for many prospective institutional investors, Nardini told Cointelegraph.
However, not all agree that the…
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