The fourth-ever occurrence of the Bitcoin halving took place a few hours ago at the 840,000th block. This halving event is widely recognized as the most significant economic mechanism that affects the supply of Bitcoin (BTC) and creates scarcity for this digital asset.
During the Bitcoin network’s fourth halving event, the rewards for mining a block were reduced from 6.25 BTC to 3.125 BTC, effectively cutting Bitcoin’s issuance rate in half.
Karim Chaib, the CEO of crypto platform Dopamine App, emphasized the importance of the halving in relation to Bitcoin’s scarcity and market valuation. He explained that the halving is an inherent feature of Bitcoin’s code, occurring every 210,000 blocks mined, which amounts to approximately four years.
The first halving event for Bitcoin took place in 2012 when the issuance rate was reduced from 50 BTC to 25 BTC per mined block. The subsequent halvings occurred in 2016 and 2020, further reducing the issuance rate to the current 3.125 BTC.
According to Chaib, this predetermined scarcity sets Bitcoin apart from traditional store-of-value assets. He believes that Bitcoin’s economic design and halving mechanism, which are based on effective mathematical methods, position Bitcoin as a deflationary asset. As a result, Bitcoin becomes the first reliable alternative to gold, surpassing other assets in terms of performance.
In the past year, the price of Bitcoin has risen by 122%, while the price of gold has only increased by 19%. Year-to-date, Bitcoin has seen a 51% increase, compared to a 15% increase in the price of gold, according to TradingView.
Precious metals and real estate have long been considered the best options for storing value. However, with the advent of the digital age, there is a growing demand for more liquid assets that can facilitate faster transactions. This shift in preference ultimately benefits Bitcoin, as explained by Jonas Simanavicius, co-founder and CTO at Syntropy.
In conclusion, despite the Bitcoin halving event, the top five BTC miners are not selling their holdings, suggesting a strong belief in the future potential of this digital asset.