A Book and a Halving

It’s a momentous week in the world of crypto. Today, 17th April, my new book for BCS, The Chartered Institute for IT, is released. The early reviews have been humbling –

Getting Started with Cryptocurrency is a must-have book for early explorers and seasoned professionals alike…

… a gem in the crypto literature landscape

… an excellent primer which uses clear and accessible language to explain many of the key concepts behind cryptocurrency and blockchain

You can grab your copy from Amazon, or direct from BCS if you’re a member. You’ll also be able to pick up signed copies from me at the official launch at BCS on 1st May, at The Digital Commonwealth’s Mansion House Summit on 2nd May, and at similar events through May and June.

Obviously this is the most important thing happening in crypto this week… but wait. Bitcoin is also up to something, counting down to a change in its rhythm that happens every four years. Welcome to the Halving.

What is the Halving?

Each time a block is added to the Bitcoin blockchain, the miner who confirms its addition and cryptographically secures the block receives a reward. This is the way in which new coins are added to the overall supply. When Bitcoin was created, each confirmed block earned its miner 50 Bitcoin. However, the software is programmed to only ever release 21 million Bitcoin, and therefore the block reward gradually reduces over time.

At block 210,000, the reward halved to 25 Bitcoin (28th November 2012)

At block 420,000, the reward halved to 12.5 Bitcoin (9th July 2016)

At block 630,000, the reward halved to 6.25 Bitcoin (11th May 2020)

We are expecting to reach block 840,000 between midnight on 19th April and 1am on 20th April, give or take a few minutes and a flurry of confirmations. That’s when the block reward halves automatically to 3.125 Bitcoin.

What’s going to happen?

The halving causes something of a shakeup of the ecosystem each time. The profit margins for miners can be cut to nothing, which is why this time we have seen mining data centres repurposing some of their hardware to process Generative AI algorithms instead of Bitcoin block algorithms.

There is usually a lot of price volatility over the following months that cascades through the other crypto assets in the market. Volatility, of course, means down as well as up. Crypto is classed as a high risk investment for a reason. Bitcoin is not immune to world events, and it responds to demand and supply pressures like any other asset. For investors it will be an interesting time.

We’re also expecting to see something of a shift in the behaviour of miners. As revenue halves, people seek to minimise costs to prop up the bottom line. Using renewable sources instead of fossil fuels becomes a more attractive proposition. There are challenges – for example, blocks need confirming 24/7 but the sun does not always shine. However, if this halving pushes more miners down the road of sustainability, it’s a win for crypto as a whole.

Remember – mining, using energy to process an algorithm for blockchain security, is exclusive to Bitcoin and a handful of smaller chains. Ethereum moved away from that system in 2023 and all more modern blockchains have developed different methods of building a cryptographically secure chain that do not use energy (other than in hosting the distributed ledger on multiple nodes, as every blockchain must). However, Bitcoin is the cryptocurrency that started everything, and its market dominance continues. I’ll be watching at midnight on Friday to see block 840,000 added to the chain.