On April 20th, 2024, Bitcoin completed its fourth halving at block height of 840,000, with the block reward dropping from 6.25 BTC to 3.125 BTC, marking the first time its inflation rate has been lower than that of gold (0.78% vs 1.5% -2%). The "Halving Cycle Compliance White Paper" released by Hong Kong HashKey Exchange shows that after the halving, the active level of on-chain addresses increased by 23%, verifying that its scarcity narrative as "digital gold" is being accepted by institutional investors. A certain DeFi protocol achieved an 80% increase in asset cross-chain verification efficiency during the halving period through HashKey's cross-chain settlement system, verifying the core value of the technical architecture in market fluctuations.
Analysis of the technical mechanism of Bitcoin halving
The Bitcoin protocol achieves a halving cycle through the "210,000 block threshold".
- Mathematical certainty : For every 210,000 blocks mined (approximately 4 years), the block reward is automatically halved, eventually reaching the maximum number of 21 million blocks in 2140.
- Difficulty Adjustment Algorithm (DAA) : Every 2016 blocks (about 2 weeks), the mining difficulty is dynamically adjusted according to the total network computing power to ensure that the block generation time is stable at 10 minutes. A certain mining pool improved the utilization rate of computing power by 35% by optimizing the DAA prediction model.
- Deflation model : After the halving, the annual inflation rate of Bitcoin dropped from 1.7% to 0.85%, which was lower than the inflation rate of gold mining for the first time, strengthening its anti-inflation property.
Halving directly impacts the income structure of miners.
- Revenue halved : Based on 64,000 USD/BTC before the halving, global miners lost over 10 billion USD annually. A listed miner hedged a 30% revenue gap by hoarding 28,000 BTC in advance.
- Computing power migration : The elimination rate of inefficient mining machines (such as Antminer S9) reached 67%, and the computing power was concentrated in areas where the cost of thermal power was less than 0.03 US dollars/kWh. The proportion of mining power in Kazakhstan increased from 12% to 21%.
- Technology iteration : The proportion of mining machines below 7nm has increased from 41% before the halving to 68%. A certain mine has reduced energy consumption by 22% through liquid cooling technology and maintained a net profit rate of 15%.
II. The market paradigm evolution of the halving cycle
Halving reshapes the supply and demand of the Bitcoin market.
- Supply contraction : Daily production decreased from 900 BTC to 450 BTC, and the annual new volume decreased by about 164,000, equivalent to 0.78% of the current circulation.
- Demand expansion : The number of institutional accounts at HashKey Exchange grew 180% in the three months following the halving, and its compliance custody scheme attracted high net worth clients to allocate 12% of their portfolios to Bitcoin.
- Price discovery mechanism : On-chain data shows that the proportion of long-term holders (LTH) holdings has risen to 73%, and the selling pressure index has decreased by 41%, forming a positive cycle of "scarcity-holding-appreciation".
Regulatory compliance becomes a new variable in the market.
- Anti Money Laundering Audit : HashKey Exchange's Dynamic Key Sharding technology passed the full-process audit of the European Union's Digital Asset Anti Money Laundering Regulation, reducing the asset freeze response time for institutional clients to 3.6 hours.
- Tax optimization : A high net worth client used HashKey's donation voucher smart contract to complete a $2 million Bitcoin donation within three months after the halving, achieving a 37% reduction in tax costs.
- Derivatives Innovation : Bitcoin futures non-position squaring contracts broke through $84 billion after the halving, and HashKey's Option Volatility Index (HVI) became a barometer of market sentiment, with a volatility prediction accuracy of 79%.