Halving – what is it and what to expect for miners and investors

Published: 20 марта 2023

5 min

What is a holding company?

Holding is the process of reducing the reward for mining a block of cryptocurrency, which occurs in blockchain networks with a fixed amount of emission, such as bitcoin. After halving, miners receive half as much reward for the block they find as before it. Halving occurs every 210,000 blocks, about once every four years, and this is a key event for investors and miners.

What can miners expect from halving?

For miners, this means that their profitability may decrease by half after halving. At the same time, halving also means a decrease in the issuance of cryptocurrencies, which can lead to a shortage in the market. This can increase the price of the cryptocurrency and, ultimately, lead to an increase in profitability for miners.

What can investors expect from halving?

Halving can also be an interesting event for investors. A decrease in the issue of cryptocurrencies means a decrease in supply on the market, which can lead to an increase in price. If the demand for cryptocurrency remains unchanged, then a decrease in supply may lead to an increase in its value.

How to use halving to earn money for a trader on a cryptocurrency exchange

Halving can affect the cryptocurrency exchange rate and provide traders with the opportunity to earn money. Here are a few principles on how to use halving to make money on the cryptocurrency exchange:

Study the previous halvings. Historical data can help you understand how the market reacts to this process. Explore how the price of cryptocurrency changed in previous halving periods, what were the changes in trading volumes and what were the trading results.
Follow the news. News can have a big impact on the price of cryptocurrencies and help you predict changes in the market. Study halving reports, analytics and news from the world of cryptocurrencies to stay up to date and make informed decisions.
Set goals and strategies. Before you start trading, define your goals and strategies. What kind of profit do you want to get and for how long? Which strategy will you use: long-term or short-term? Will you hold the cryptocurrency or sell it immediately after halving?
Use technical and fundamental analysis. Market analysis will help you understand how halving will affect the price of cryptocurrency. Evaluate technical indicators such as trading volumes and price changes, as well as fundamental factors such as news, indicators of social mood and market trends.
Manage risks. As in any trade, it is important to be able to manage risks. Develop your risk management strategy, set stop losses and profit levels, and monitor your investments to avoid losses

How to use halving to earn a miner?

Halving can give additional opportunities for miners to earn money. Here are some tips on how to use halving to earn money on a cryptocurrency mining exchange:

Study the historical data. Explore how the mining reward changed in previous halving periods and how it affected the number of miners and the volume of cryptocurrency mining. This will help you understand how best to plan your work during the halving period.
Upgrade your equipment. During the halving period, a decrease in the mining reward may reduce the profitability of working on old equipment. Therefore, if you have the opportunity, upgrade your mining equipment to a more productive one in order to get more profit.
Join the pool. A mining pool is a group of miners who combine their capacities to mine cryptocurrencies. During the halving period, joining a pool can help increase profits, as combining capacities gives more chances to create new blocks.
Use alternative cryptocurrencies. If you notice that the profitability of your current equipment is declining, then you can consider mining alternative cryptocurrencies. During the halving period, some alternative cryptocurrencies may turn out to be more profitable than the main ones.
Manage expenses. It is important to be able to manage expenses during the halving period. Develop your cost management strategy to avoid unnecessary expenses and maintain your profitability.

The effect of halving on the Bitcoin exchange rate

Halving Bitcoin is one of the most anticipated events in the world of cryptocurrencies. It occurs every 210,000 blocks, that is, about once every 4 years, and consists in reducing the reward for mining a new block in the Bitcoin network by half.

Historical analysis shows that halving Bitcoin had a significant impact on its price. After the first halving, which occurred in November 2012, the price of Bitcoin began to grow rapidly. At the time of halving, the price was about $12 per Bitcoin, but by December 2013 it had risen to $1,200. This is an increase of 10,000% per year!

The second halving occurred in July 2016, when the price of Bitcoin was approximately $650. After this event, the price began to gradually increase and by December 2017 reached its historical maximum of more than $20,000.

The third halving occurred in May 2020, when the price of Bitcoin was about $8,000. Immediately after halving, the price did not change, but after a few months it began to grow and reached a new high in January 2021, exceeding $ 40,000.

Therefore, historical experience shows that halving Bitcoin has a significant impact on the price of this cryptocurrency. Many analysts suggest that this is due to a decrease in the supply of Bitcoin and an increase in its demand, which in turn leads to an increase in its price. However, as in any financial markets, the past does not guarantee future results, and investors need to take into account all the factors affecting the price of Bitcoin before making a decision to buy or sell.

Bitcoin Price Forecast after the Fourth Halving

The fourth halving will be made in 2024. It is impossible to predict the exact price of Bitcoin after the fourth halving. Despite the fact that halvings have previously had a significant impact on the price of Bitcoin, this does not mean that they will necessarily lead to an increase in the price. The value of Bitcoin depends on many factors, including the general demand for cryptocurrencies, changes in the economy and politics, the volatility of financial markets and even news events.

Some analysts suggest that the fourth halving may lead to a further increase in the price of Bitcoin in the medium and long term. They point out that reducing the reward for mining blocks reduces inflation in the Bitcoin network, which can lead to a decrease in supply and an increase in demand for cryptocurrency

However, as with any investment, there are risks, and the decision on whether to buy or sell Bitcoin should be based on a full analysis of the financial markets and an individual investment strategy. In addition, it is important to remember that past market behavior does not guarantee future results, and any investment in cryptocurrencies should be based on individual analysis and risk.

Conclusion

Halving is an indicator of the demand for cryptocurrencies. After each halving, Bitcoin, for example, became more and more popular, and its price increased over a long distance.

As a result, halving is an important event for miners and investors. For miners, this may mean a decrease in profitability, but at the same time, a decrease in the issue of cryptocurrency may increase its price. For investors, halving can mean an opportunity to make money on the increase in the price of cryptocurrencies in the long term.

In any case, after 2024 we will see a completely different cycle of Bitcoin development. Halving gives users the opportunity to feel that they have a really valuable asset in front of them, which cannot be printed and devalued indefinitely, and therefore, the price of the cryptocurrency will only go up.