The Bitcoin halving is one of the most important events in the crypto community in 2024, as the reward decrease will most likely impact the market like never before. Miners will be the most affected since their input will have to boost in order to balance their computational power with the new reward limitations.
Besides Bitcoin miners, validators, and users, the entire crypto sector will feel a disturbance during the halving because prices are entirely affected by investors’ sentiment index and behavior. The Ethereum price might experience some buoyancy during the event due to several factors, such as more resources and innovation flowing into its ecosystem. Therefore, if you want to learn how to buy Ethereum, you must research it properly, Binance data shows.
Still, the Bitcoin halving might positively impact the entire crypto environment, which is why the prices previous to the event have been exploding. It seems like investors have gained their powers and boosted the crypto prices, contributing to a fantastic series of events.
But things can also make a U-turn, so let’s analyze all the possible situations.
What Happens During The Bitcoin Halving?
The Bitcoin halving is a mechanism created by the cryptocurrency’s creator that aims to lower block rewards in order to increase demand. The event occurs every four years, and there are 32 total Bitcoin halvings according to its maximum supply.
In 2024, the reward will lower from 6.25 BTC to 3.125 BTC, being the fourth Bitcoin halving and marking a critical moment in the crypto industry. Bitcoin prices might explode around this time, but miners will suffer the most due to an increased effort to sustain their operations. When the reward lowers, miners must compensate with more substantial computational power to make the same income as before, which is not only considerably expensive but also not environmentally friendly. Bitcoin mining is believed to generate about 65.4 megatons of CO2 yearly, which is the equivalent of a country’s CO2 at the level of Greece.
How Does This Event Affect Ethereum?
An occurrence of this magnitude can affect the entire market, especially Ethereum, due to its size and importance. During the halving, Bitcoin’s low coin supply can generate scarcity for the cryptocurrency, meaning investors’ interest will shift to other coins, mainly Ethereum.
That’s also why the price of Bitcoin exploded months after the halving because investors were saving up for later when Bitcoin’s scarcity could affect their portfolio. Therefore, it’s expected that investors will concentrate their assets on other coins in order to diversify their portfolios and mitigate volatility risks.
Unfortunately, this event might also trigger unwanted things from Ethereum. The price surge will automatically affect applications and smart contracts, and the costs of developing and maintaining them will also increase, so users will have to seek alternatives for more cost-effective solutions.
How To Prepare For The Halving
Most investors prepared for the upcoming halving months ago since prices can be very volatile and investor sentiment can change rapidly. Still, there are ways to ensure you’re ready to face the halving during and after it, starting with educating yourself on the matter. Indeed, this halving is more important than the previous ones, and understanding why is crucial to withstand the price spikes.
It’s also best to learn how to monitor the market because tracking cryptocurrencies’ performance is necessary to adapt your portfolio to volatility changes. If you have the time, analyze historical patterns and try to notice any signs of similarities that could happen in the future as well. Automated software solutions can help you considerably, so you’re only left with handling the decision-making process.
Again, joining crypto communities will help you adjust your portfolio and strategies because experienced investors and developers can offer you valuable advice. Moreover, you may discover new ways of approaching crypto and improve your output.
How Are Miners Getting Ready?
Miners are the most affected during any halving, and they should expect the following ones to be even more challenging. However, this halving can be quite difficult to navigate, so miners have been upgrading their hardware and software for some time, aiming to improve their hash rates.
Considering how much energy Bitcoin mining consumes, miners are also looking for cheap and sustainable renewable energy to power their rigs, like wind and solar power. Moreover, renowned mining companies are introducing automation systems to adapt their energy input to the best location where energy is cheap and plentiful.
Miners are also trying to diversify their revenue streams, considering that their income will be significantly lower. For example, they’re approaching computing systems that allow exposure to the digital asset ecosystem, while others are interested in cloud and artificial intelligence as promising services to the end consumer.
How To Protect Yourself From Security Risks
Besides volatility, the halving of Bitcoin can also pose serious security risks to users due to the low power coming from miners to safeguard the network. Indeed, small miners might withdraw from mining due to increasing costs and requirements, which could potentially harm network security.
Some events estimate that 51% of the hashing power can be vulnerable to attacks, increasing the chances of someone hacking the blockchain. While previous halvings haven’t experienced significant security issues and the transition was smooth, investors should still be prepared for less fortunate events.
Besides diversifying to counteract volatility risks, it’s best to be wary of the sites you access for information and make sure you’re not the victim of phishing or malware attacks, as hackers have gotten better at phrasing these attacks. There are cases in which hackers create websites from scratch, acting as exchanges or crypto businesses that seem genuine. In reality, these sites are full of malicious links that could infect your PC.
Final Considerations
The Bitcoin halving is a massive event happening in 2024, and the entire cryptocurrency market is getting ready to withstand its outcome. Digital assets like Ethereum are believed to be the most impacted by the volatility spikes and value inflow, which is why their prices might also boom during and after the halving. However, the event can also trigger difficulties for developers since the prices for creating applications may also increase.
Ben Austin is the founder and CEO of multi-award-winning digital marketing agency Absolute Digital Media. Ben loves to write and share exclusive insights into the world of digital marketing from his own eyes.
