Halving is coming. How to be prepared for it?

  • Ultramining
  • 1 June, 2023 09:00
Halving is coming. How to be prepared for it?

On one hand, halving is a great mechanism that stabilizes and slows down the generation of new coins. This is made to prevent the inflation process. On the other hand that’s literally a twofold reduction in miner reward for closing the block. Such a process is common for every cryptocurrency that uses proof of work scheme. For example, Litecoin.

The halving is a huge event in the mining industry, as it affects the interests of each miner. Each previous halving reshuffled the BTC mining industry. As the market players will definitely change, the switch in hashing power will inevitably have a significant impact on the stability of the network. For pools without strong technical capabilities, this might lead to a reduction in daily mining rewards for the miners.

However, halving is an unstoppable process that happens every 210k block. That’s about once every four years. And the next halving is coming really close. And we’re waiting for it to happen in April, 2024.

We’ve talked with a ViaBTC representative about the upcoming halving, and the market response to it.

How will the market respond to the imminent Bitcoin halving?

During the previous crypto bull, the BTC price started falling after briefly peaking at $69k in November 2021. And the current price has dropped by 62% from that peak. For a long time, the entire crypto market remained pessimistic due to macroeconomic policies, changes in regulatory policies, and geopolitical influences. In the meantime, investors are eagerly awaiting favorable events to break the deadlock and regain confidence.

The upcoming Bitcoin halving in 2024 could be regarded as a potential positive.

It is precisely because of the impact of supply and demand and the steady growth of global demand for Bitcoin that the BTC price has reached new highs after each of the three previous halvings. However, unlike the previous ones, as Bitcoin expanded its influence beyond the crypto world in 2021, a growing number of institutional investors have started to include Bitcoin in their portfolios. Some big investment firms and banks have begun to offer Bitcoin trading and investment services to their clients. In addition, more payment platforms and retailers are starting to accept Bitcoin payments. As it is adopted by more and more traditional institutions, Bitcoin is becoming increasingly recognized and accepted as a crypto asset.

However, this is no excuse for blind optimism. While the Bitcoin halving may drive up the price, halving alone isn’t the only factor and doesn’t guarantee a surge in price. Investors should stay attuned to market movements, carefully assess risks and returns, and make informed investment decisions.

How should investors prepare for the changes and minimize risks?

Investing is a demanding venture. People are perfectly aware that they need to learn how to swim before jumping into a pool, but most individuals join the investment market without first learning how to invest. Both speculators interested in short-term returns and value investors engaged in long-term investments should first learn what Bitcoin halving is.

After mastering Bitcoin halving and market dynamics, investors can then develop practical investment strategies. Here, the word practical means to build appropriate investment strategies based on an investor’s own goals and risk appetite. For instance, a diversification strategy that spreads investments across different crypto assets and markets could reduce investment risks.

Next, investors have to make sure that their crypto assets are well protected. Whenever the market gets excited, malicious players burst out of their lair. Be sure to protect your private keys, and never disclose personal information online. Investors can also consider storing assets in secure crypto wallets or using cold wallets.

Whenever the market gets excited, malicious players burst out of their lair.

The crypto market is characterized by its significant volatility and risks. This might be especially true before and after Bitcoin halving, which destabilizes the market. Therefore, investors should remain calm and rational and avoid blindly following trends or panic selling. It’s also advisable for investors to develop well-defined investment plans and stop-loss strategies to minimize risks.

What awaits miners after the halving?

Bitcoin halving will have a major impact on mining revenue, as it consists of block rewards and miner fees, with block rewards accounting for the majority of total earnings. Prior to the halving, miners are rewarded with a certain amount of Bitcoin for each block they mined, but the figure will be cut by half after the halving.

Specifically, Bitcoin halving means that the Bitcoin reward halves every 210,000 blocks. During the infancy of the network, miners received a reward of 50 bitcoins per block, which was cut to 25 bitcoins by the first halving in 2012. The second halving occurred in 2016, which slashed the reward to 12.5 bitcoins. The reward then dropped to 6.25 bitcoins following the third halving that took place in 2020.

As such, Bitcoin halving also means that miners have to produce more coins or profit from a price surge to earn the same revenue. This can have a negative impact on miners using expensive electricity and equipment, as it will affect their productivity and profitability. Miners who cannot generate sufficient revenue to cover their mining costs might be driven out of the market.

Miners who remain active will also need to take measures to maintain profits. For instance, they could try to improve the efficiency and performance of their mining machines, reduce energy costs, and seek cheaper electricity and equipment.

That being said, if the market price continues to rise and even reaches new highs, the mining industry may witness another period of fierce competition. Whether the industry booms as it did during previous market cycles or declines and forces miners to shut down their machines, miners should keep track of market movements and develop appropriate strategies to adapt to the new environment after Bitcoin halves.

How will ViaBTC respond?

ViaBTC was founded in 2016. And from the beginning has focused on the work of R&D team tackling the tech difficulties head-on. Focusing on the underlying architecture of the pool, the company deployed multiple bitpeers and introduced blockmasters to optimize the broadcasting of blocks. Additionally, the pool also deployed mining nodes all over the world to match miners with the nearest one, which has minimized delays and improved the broadcasting speed.

From a historical perspective, Bitcoin halving presents both opportunities and challenges, as it facilitates the transformation of the entire BTC mining ecosystem.

Besides, with the growing global demand for Bitcoin and record-high transaction volumes, the network is frequently congested and could become even more congested after the halving. Long waiting times and expensive transaction fees are destroying the user experience for many. In 2018, ViaBTC introduced the Transaction Accelerator to offer 100 free acceleration opportunities per hour, as well as paid acceleration services, to all Bitcoin holders. By joining hands with mainstream mining pools, we can prioritize your transaction to maximize the confirmation speed.

From a historical perspective, Bitcoin halving presents both opportunities and challenges, as it facilitates the transformation of the entire BTC mining ecosystem. Here, survival of the fittest fully applies. Only companies that adapted to market demands and changes and continued to pursue technological innovation could survive the fierce competition.

ViaBTC claims to keep their near focus on satisfying user experience and comprehensive reliable crypto products.

To be more prepared for a BTC halving, we advise looking through ViaBTC’s Blog section. It offers insightful articles and reports on Bitcoin halving from time to time, equipping more investors with deeper insights into their risk appetite and market dynamics.

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