So, Bitcoin Halving is done. What happened and what’s next?

The highly anticipated fourth iteration of the bitcoin halving took place a little after 8:09 PM Eastern on Friday. Bitcoin traded flat in the immediate aftermath of the halving, holding steady around $63,000.

After the halving, the rate of issuance of new bitcoin as well as the rewards for successful bitcoin miners are cut in half. There can only be 21 million bitcoins, and fewer new tokens entering circulation can affect bitcoin prices. That is why the halving is closely watched by miners and investors.

What happened at this halving?

After today’s halving, the rate of new bitcoin created approximately every 10 minutes is 3.125. These halving events occur after every 210,000 blocks are validated or approximately every four years and were baked into the network’s design when it was originally launched in January 2009.

After the halving, the block reward or subsidy associated with validating each new block of transactions on the Bitcoin network is cut in half. The block subsidy is the newly created bitcoin included in the block as a reward to the associated miner. So in reality the block subsidy for successful miners is now 3,125 bitcoin.

In addition to the subsidy, miners also collect any fees associated with the transactions in the block.

The halving block was mined by ViaBTC, and it was the 840,000th block mined on the Bitcoin network. However, it is interesting to note that the successful miner took a little over 40 bitcoin or equivalent of over $2.6 million in block subsidy and fees as their reward, according to data from mempool.space.

This fee is much higher than the slightly more than 7 bitcoin, worth a little more than $450,000 in total fees earned for successfully validating the blocks that came immediately before the halving block. The reason for this increase is unclear, but perhaps it was people willing to pay higher fees to get their transactions below the 3,050 included in the halving block.

What happens next?

In the past, halvings have led to new highs for the bitcoin price in the months following the events. However, this time was different, as the bitcoin price had already reached a new all-time high in the months leading up to the halving.

Much of the recent rally has been driven by the spot bitcoin exchange-traded funds (ETF), perhaps an indication that the demand created by that market may have a greater impact on bitcoin prices than halving events.

According to Kraken’s head of strategy, Thomas Perfumo, there is some additional symbolism attached to this halving in terms of illustrating bitcoin’s apolitical, unwavering monetary policy at a time when many people around the world have questions about their own currencies.

“At a time when you have people looking at their conventional currencies — inflation, interest rates and the economic environment they’re living in — they see this alternative form of currency, bitcoin,” Perfumo told Bloomberg.

However, analysts at JPMorgan and Deutsche Bank said that the impact of this halving is mostly baked into current bitcoin prices and there is unlikely to be a major upward movement in the price in its wake.

According to these reports, the short-term effects of the halving may be limited to the bitcoin mining sector, where consolidation may occur as overall hashrates drop due to reduced profitability.

That said, there are also indications that miners may have opportunities for increased income, even if the halving does not result in a price surge. This increased revenue would come through increased total transaction fees led by recent developments such as Ordinals and layer-two networks.