Bitcoin smoothly transitioned through its much-anticipated fourth halving in what has become a notable quadrennial event in the cryptocurrency scene.

The 20 April halving had no notable immediate impact on the price of Bitcoin, peaking at $99,618 on 19 April and $101,998 on 21 April.

This follow previous trends, where new highs were only reached between seven to 12 months after the halving: there was an 8,547% in increase in price within a year of the 2012 halving; a 389% rise within a year of the 2016 halving, and a 659% rise in the year following the 2020 event.

The halving every four years reduces the rewards from Bitcoin mining by half, which in turn halves Bitcoin inflation as Bitcoin mining is the only way that new coins are minted.

As of the 840,000th block in the Bitcoin blockchain, a miner that ‘wins’ the proof of work challenge to produce a new block will now be rewarded with 3.125 new BTC, down from 6.25BTC before 20 April.

Despite its somewhat esoteric nature, this event attracts a great deal of attention, primarily because of its anticipated medium and long-term effects on the value of Bitcoin.

Take it easy

Many analysts are urging caution for investors, however.

JPMorgan crypto analyst Nikolaos Panigirtzoglou noted that “We do not expect bitcoin price increases post halving as it has been already priced in.”

Other analysts, including Deutsche Bank and Goldman Sachs, also noted that the halving was already priced in, although longer term predictions were all over the place, as they usually are in crypto.

Nathaniel Whittemore from Learn Capital said that previous halvings have been anticlimactic themselves, but they tended to have longer term effects.

“Following the previous two halvings it took Bitcoin seven months to reach new all-time highs,” he noted.

Resource hungry

Bitcoin miners, however, are likely to see reduced income in the immediate term, although anybody hoping that this might curb the growth of the power-hungry Bitcoin mining industry is likely to be disappointed.

According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin currently consumes between 0.2% and 0.9% of global energy.

Historically, the growth in the value of Bitcoin has more than offset the reduced rewards.

At the time of the 2016 halving, for example, a Bitcoin was worth close to $1,000.

By the 2020 halving, the price of Bitcoin was $13,000.

And as of 20 April this year, one Bitcoin fetched just over $100,000.

In research released concurrently with the halving, Blockchain researcher CoinShares found that the average production cost per Bitcoin among major mining companies is now approximately US$82,600 post halving.

CoinShares also noted that transaction fees are comprising an ever-larger part of the block reward, in some cases exceeding the mining income.

The growth in those fees has been heavily driven by congestion resulting from the controversial new NFT-like Ordinals as well as Runes, which enables the creation of new fungible tokens using the Bitcoin blockchain.