There will only ever be 21,000,000 bitcoins. In order to get there, miners who solve a block are paid out in new bitcoin. That plus transaction fees are the incentive to mine. In 2009, miners would receive 50 bitcoins per block solved. If this went on forever, there would be considerably more than 21 million. So, Satoshi implemented halvings into bitcoin’s monetary policy.

The halving is one of the most anticipated events in bitcoin. Bitcoiners everywhere anticipate it, but what is a “halving”?

There will only ever be 32 halvings before all 21 million bitcoins are produced. While it is important to bitcoin and the protocol, it is often feared by miners. Let’s dig deeper.

Every 210,000 blocks–roughly four years–the block reward gets cut in half–the halving. In 2012, the block reward went from 50 BTC to 25 BTC. In 2016, the block reward went from 25 BTC to 12.5 BTC. In 2020, the block reward went from 12.5 BTC to 6.25 BTC.

A halving is a 50% decrease in the new supply of bitcoin.

On April 20, 2024, the block reward will go from 6.25 BTC to 3.125 BTC. Instead of 900 new bitcoin each day, only 450 new bitcoin will be produced each day. This change in new supply has had interesting effects on the price of bitcoin each halving.

A 50% decrease in block rewards is effectively a 50% decrease in revenue–especially for FPPS miners. This change will be immediate. In order to stay afloat, many miners look to past halvings for answers moving forward.

History repeats itself – data from previous halving cycles

Halving 2012: price, hashprice & difficulty

On November 29, 2012, bitcoin underwent its first halving. The price of one bitcoin was $12.25, but it didn’t stay there.

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The price of bitcoin appreciated drastically as the new supply was cut in half. For the first time ever, the market saw bitcoin get more scarce. In just one year, the price increased to $1,129–a gain of 9116.33%.

With considerably more profits to be made mining, more miners came online. The first ASICs were also released roughly two months after the 2012 halving. There was now an optimal way to mine bitcoin, combined with an extreme price growth. As expected, the difficulty increased exponentially, too–by a factor of 184x. Bitcoin seemed to have caught on.

Mining revenue, in hashprice (USD per Terahash per second per day [$/TH/s/day]) began to decrease as a result. Since there were more miners to split the fixed block rewards with, revenue per miner decreased. Everyone’s piece of the pie got smaller.

Halving 2016: price, hashprice & difficulty

The next halving took place on July 9, 2016. The block reward got its first decimal, cutting from 25 BTC to 12.5 BTC.

Yet again, the price took off as the market adjusted to a decrease in new supply. This time around, price outgrew difficulty, and miners saw an increase in hashprice.

After the 2016 halving, bitcoin’s bull run really picked up roughly a year and a half into the cycle–reaching an all time high of just under $19,650 in December 2017. Price began to retrace thereafter, bottoming around $3,500 in March 2019.

Halving 2020: price, hashprice & difficulty

2020 was anything but a normal year, so of course it had a bitcoin halving. The third took place on May 12, 2020–right around the time everyone in the United States received their first COVID stimulus checks.

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2020 also saw a heavy dosage of money printing. A lot of that money flowed into bitcoin to hedge against expected inflation. As you might predict, an increase in demand met with a decrease in supply led to tremendous price growth–561% in one year. Again, the difficulty didn’t keep up with bitcoin’s price growth right away, and miners made more money–this time a 394% increase in hashprice after one year.

There was now an established pattern of “cycles” for bitcoin. For about a year following each halving, the price would go on a massive run. Then, it would retrace just above the previous cycle’s all-time high. It wouldn’t reach a new all-time high until the next halving cycle.

That was until March 14, 2024.

Halving 2024 - what to expect: price, hashprice & difficulty

Roughly one month before the 2024 halving, bitcoin reached a new all-time high of $73,750. This technically took place during the 2020 halving cycle. In the three previous halvings, bitcoin did not close its monthly all-time-high an estimated 20 days before. On March 31st, bitcoin closed at roughly $70,300. This is the highest weekly, monthly, and quarterly close in history.

It is reasonable to assume that results from previous cycles cannot be trusted.

This time is different. But is it really?

Wall Street is officially involved.

On January 10, 2024, 9 Spot Bitcoin ETFs were approved by the SEC. These securities allow pension funds, 401Ks, retirement accounts, and just the everyday person to get exposure to bitcoin. These clients purchase the ETFs, then the ETFs purchase bitcoin.

What happens on April 20, 2024, when that ratio effectively doubles going forward? Let’s take one last look at previous halving data, in a fancy table.

The only thing certain for this fourth halving is that the block reward will go from 6.25 BTC to 3.125 BTC. Miners will see a 50% decrease in their revenue. Many of them may go underwater because of this.

ALL MODELS ARE BROKEN

Models are useful tools for price predictions, but they are not perfect. Models are considerably less useful when bitcoin’s price doesn’t follow them. Through previous halving cycles, bitcoin was so unknown and uncertain. Very few people understood what it could be. Things have changed. Governments are mining it with excess hydro energy and geothermal energy from volcanoes. Pension funds are gaining exposure to it. For the first time going into a halving, bitcoin is a legitimate, respected asset class that has institutional support.

Everyone can make educated guesses or assumptions about bitcoin’s price, but that is all they are – guesses. Nobody knows for sure. The only thing that is certain is that society needs a borderless, decentralized, digital money. Those who continue to study bitcoin, not models, will thrive.

(Perhaps the Dune Model is the only informative way to make bitcoin price predictions. When is the next one coming out?)

Tips on how to survive the halving

Miners will do everything at their disposal to stay afloat–use firmware to increase efficiency, access funds quicker and more frequently, and lower management costs.

Braiins stack offers all of these options. Industry-leading Braiins OS is available, allowing users of both Braiins OS and Braiins Pool to pay zero pool fees. Braiins Pool additionally offers lightning payouts, providing users with instant, zero-fee payments. The newly added Braiins Manager gives miners the ability to control and curtail their mining farms remotely, lowering the need for and cost of in-person data center management.

How can Braiins OS help miners survive the halving?

1. Autotuning identifies each chip on an ASIC to then run them at the optimal TH/s, producing optimal TH/W efficiency.
2. Flexible strategies like underclocking are another option, where miners achieve stronger efficiency through less power usage on Braiins OS.

3. Dynamic Performance Scaling on Braiins OS can automatically control miners’ power consumption, preventing downtime and hardware failures when exposed to hotter temperatures.

How can Braiins Manager and Braiins Pool help miners survive the halving?

1. Simple management of bitcoin mining farms will allow miners to remotely control machines and monitor any data necessary.
2. Curtailment through Braiins Manager can help miners participate in demand response and increase their operational profits.
3. Lightning payouts will allow miners to lower transaction fees and time while consolidating UTXOs. When margins are tight, quick, easy access to revenue is key to survival.

Mine more bitcoin with Braiins–especially after the block reward gets halved.

Halving memes to share

It’s not a Braiins Blog without memes. Here are two more of our favorites:

Buy orders will flood the market like Saruman’s Uruk-Hai at Helm’s Deep.

Or will they? Again, nothing is certain. Those who stay focused on learning will thrive. Stay humble and stack stats, but don’t be afraid to celebrate the halving. There will only ever be 32 of them.

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