By Arun Kumar Shrivastav 

 

 

 

THE historic fourth Bitcoin halving event came at 00.09 UTC on Saturday (05.39 am IST on Sunday) when the Bitcoin network posted its 8,40,000th block. The highly-anticipated moment embarks the cryptocurrency industry on a new phase when mining rewards for minting new blocks on Bitcoin are reduced to half. Before the halving, miners were receiving 6.25 BTC for each new block minted on the Bitcoin network. Now, it is reduced to 3.125 BTC. It means miners, who play a critical role in verifying transactions on the Bitcoin network, will receive less for their work. However, bitcoin halving is aimed at creating an official scarcity of BTC to ensure its prices remain resistant to BTC inflation. In other words, the rising and resilient BTC prices are expected to make up for the loss for the miners. The previous three bitcoin halving took place in 2012, 2016 and 2020, with the first bitcoin halving in 2012 bringing down the mining reward from 50 BTC to 25 BTC. The BTC price at the time of the first three halving events in 2012, 2016, and 2020 was $12.50, $638.51, and $8,475.00 respectively. At the fourth halving event on April 19, BTC is priced at the $63,000 level. It means while mining rewards have been reduced, the reward going to miners has increased significantly in value.

 

Bitcoin’s anonymous founder known by his pseudonym Satoshi Nakamoto remains a mystery, like many in the crypto and blockchain industry. Satoshi Nakamoto is believed to be part of a group of software developers. After creating a programmed digital asset called Bitcoin, which he said in a white paper, is subject to no interference, no regulation and no surveillance, disappeared around May 2011 (According to some, it was December 12, 2010) but not before earning 1 million BTC by minting new bitcoins, which very few would do at that time, when some crypto geeks mined 200 BTC a day with the old 286 computers. As per a report in June 2023, miners spend $10,000 to $15,000 to earn a single BTC these days. It’s because miners all over the world compete with each other to verify transactions, which is done based on proof-of-work, solving cryptographic puzzles. Mining companies use thousands of super-fast computers, called mining rigs, and run round the clock throughout the year. Besides huge investments, the process consumes a lot of electricity. But, it is part of the Bitcoin system, a full-proof system that has not been breached or faced a downtime even once, so far. You may wonder how much money there is for miners to earn from BTC mining a day!

 

The website cryptofees.info tracks mining revenue daily. According to its latest data, the 7-day average for a single day earning from BTC mining was $7,622,494.03 (Rs 63.54 crore) while the 24-hour earning for April 19 was $11,469,404.44 (Rs. 94.62 crore) as mining fees increased exponentially during the halving event yesterday. Then, you have hundreds of other cryptocurrencies all of which work on similar systems, making crypto mining a multibillion-dollar industry, with plenty of untapped opportunity. Many big BTC holders are the people who earned the coins through mining in the formative days of BTC. Today, this trend is continuing with other coins in the cryptosystem. All it takes to earn by mining is to have the coins or tokens on the network and engage in the verifying process for upcoming transactions. If your attempt to verify a transaction is quicker than anybody else on the network, you successfully mint the block (verify the transaction) and earn the rewards, whose process and value differ from one blockchain network to another. Besides proof-of-work (PoW), there is a system called proof-of-stake (PoS), which allows miners to stake their holdings, which can be verified quickly on the network, to verify new transactions.

 

This process is faster, consumes less energy, and allows the transaction fees to be lower. However, with PoS, there is a fear of centralisation and price manipulation as miners with large holdings can manipulate transactions. Some networks use both PoW and PoS to be more secure and benefit from both systems. After every BTC halving, the cryptocurrency market has seen a bull run. The trend is already on the horizon with BTC crossing the $72,000 mark several times over the past weeks. Even at the current $63,000 level, it’s grand and magical. The short-term expectation is BTC should reach $1,00,000 level and some market analysts believe by the end of 2024, it should reach $2,50,000. The total number of BTC that could be minted is 21 million and the mining process could continue until 2140. (IPA)