Navigating the Bitcoin Halving With Ape Terminal Founder Hassan Hatu Sheikh

Bitcoin is expected to undergo its fourth halving shortly. The crypto and blockchain communities are abuzz with speculations about how the event will unfold, both in its nature and future impact.

But why does Bitcoin halving generate so much excitement? To understand this, we must have a clear grasp of what halving entails.

What is Bitcoin Halving?

In simple terms, Bitcoin halving is a programmed exercise on its underlying blockchain that halves the rate at which new Bitcoin is generated. It happens approximately every four years, similar to how leap years come and go.

Bitcoin halving refers to the process of halving the reward for mining Bitcoin transactions. This concept, designed by the cryptocurrency’s pseudonymous creator, Satoshi Nakamoto, first took effect in 2012.

The inaugural Bitcoin halving reduced the mining reward from 50 Bitcoins per block to 25. Subsequently, on July 9th, 2016, the second halving further decreased the reward to 12.5 Bitcoin.

The most recent, or third, halving took place on May 11th, 2020, reducing the reward to 6.25 Bitcoins per block. We are now anticipating the fourth halving, which will reduce the reward to just 3.125 Bitcoins per block.

According to calculations, halvings will continue until 2140, when the maximum supply of 21 million Bitcoins will be reached.

What Does Bitcoin Halving Want to Achieve?

Nakamoto created the Bitcoin halving mechanism to achieve multiple objectives. The most prominent of them was to establish a deflationary economic model, where Bitcoin’s value could be sustained by creating scarcity.

However, industry experts oppose this presumption. They say that the strategy to create artificial scarcity is futile, as any impact would have already been factored into the current price.

Moreover, the current upsurge in Bitcoin’s prices could also not be credited to the imminent halving as it was driven by the US authorities’ decision to approve 11 Bitcoin ETFs for trade in the public arena. The more crucial impact of Bitcoin halving is perhaps the reduction in miner rewards.

Reduction in Miner Rewards is a Concern!

The job of Bitcoin miners requires a significant volume of computational power to be deployed. It is for this effort that they put in that they receive the block rewards and transaction fees as incentives. A steady and gradual reduction in their rewards — therefore — may lead to a dampening of motivation.

Hasan Hatu Sheikh, the founder of Ape Terminal, a platform that positions itself as ‘the fastest growing launchpad with the industry’s greatest yield-generating tools,’ explains the miner rewards-bitcoin halving dynamics from all possible perspectives.

According to Hatu Sheikh, “It is true that Bitcoin halving leads to a significant reduction in miner rewards. However, for a miner, it is also about increasing efficiency so that the margin is not reduced in the same proportion. What it leads to — eventually — is the moving out of many inefficient miners and a deepening of the space where only the fittest will survive."

"Such consolidation is always healthy for any industry space to thrive in the long run”, Hassan believes.

What Investors Might Expect

Following Hassan’s cue, it’s important to note that even if the miners' rewards are reduced, this has always led to a significant uptick in the price of Bitcoin. That said, the quantum of growth has indeed reduced over the years due to the asset’s surging price.

For instance, following the first halving, the price of Bitcoin surged from US$13 to US$800 within a year, marking an astonishing growth of nearly 6,000%. During the second halving, the price increased from US$611 to US$3480, a 470% rise. The third halving saw a growth of 285%, with Bitcoin’s price rising from $9345 to US$36000.

Therefore, rather than clashing over the implications of Bitcoin halving, which is a reality as sacrosanct as Bitcoin itself, it is more pragmatic to keep tracking the numbers and consider investments from a long-term perspective. Halving has many upsides, including its attempts to promote scarcity and preserve value. Miners need to optimize and upgrade their operational efforts to remain profitable.