The Bitcoin halving took place there a little over a week now, on 11 May. This event which occurs every 4 years has resulted in the halving of block rewards. The first consequences are starting to be felt and it is not all rosy. Analysis!
A shortfall for miners
The halving is a major event for the Bitcoin ecosystem and especially for miners, who see the rules change overnight.
On May 11, the halving reduced the reward from 12.5 to 6.25 BTC per block mined. Thus, as the TradeBlock report suggests, the production price for 1 Bitcoin increases from around $ 6,851 to $ 15,062, an increase of 119% which is likely to affect a large number of miners. The Bitcoin inflation rate is now 1.8% which is lower than gold.
The production cost could be reduced in the weeks following the halving to around $ 12,000 following the 30% drop in the hashrate, and potentially that of the difficulty in the weeks to come.
Evolution of bitcoin hashrate in the last 3 months – Source: Bitinfocharts.
Obviously, this event is known to everyone. The miners had the time to put in place a strategy for halving, even if it meant disconnecting machines as long as profitability was low.
Following the halving, the Bitcoin network recorded a drastic increase in transaction costs.
According to data provided by Bitinfocharts at the time of writing, the average cost of a Bitcoin transaction is $ 5.82 . A figure that has undergone a 1750% increase since January 2020, where fees were $ 0.28.
Evolution of costs since January 2020 – Source: Bitinfocharts.
This sudden increase in fees in the hours following the halving can be partly explained by the explosion in trading volumes in the same period.
However, on-chain volumes have not specially evolved, we can go so far as to say that they have been particularly stable in recent months. So how do you explain the increase in fees?
Back to our miners. We saw previously that the cost of producing a Bitcoin could reach $ 15,000 following the halving. It is therefore not excluded that certain miners seek to make up for this shortfall by only letting through transactions with sufficient costs, to artificially inflate the cost of transactions.
Although the situation is far from the mythical “Death Spiral”, the situation is not rosy for the Bitcoin network. It will probably take a few weeks to adapt and stabilize.
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