The day of the fourth bitcoin halving is finally here. There's fewer than 80 blocks remaining to mine before the event, putting the halving about 12 hours away. Bitcoin surged early Friday to lead cryptocurrency prices higher. Miners and spot bitcoin ETFs also jumped.
Bitcoin traded around $64,700 to mark nearly a 4% gain over the 24 hours to Friday morning. On March 14 bitcoin hit an all-time high $73,798, surpassing its prior peak of $68,990 set in November 2021. Bitcoin has jumped about 50% so far this year, with most of the gains compounded in February and March.
Spot bitcoin ETFs swung around 2% higher early Friday after rebounding back above their 50-day lines Thursday. Shares of the bitcoin ETFs fell the four trading days prior to Thursday's jump, sparked by five consecutive days of daily outflows.
Bitcoin ETF funds saw $319.1 million in outflows between April 12 and April 18, data from Farside Investors shows. Despite the recent outflows, spot bitcoin ETFs recorded $12.27 billion in inflows since their Jan. 11 launch.
BlackRock's iShares Bitcoin Trust has been the clear leader in fund inflows since inception at $15.39 billion as of April 18. The Fidelity Wise Origin Bitcoin Fund ranks second at $8.09 billion in inflows. The ARK 21Shares Bitcoin ETF ranks third, with inflows of $2.2 billion.
The Grayscale Bitcoin Trust has recorded outflows of about $16.68 billion as of April 18. A large chunk of those stem from FTX and Genesis bankruptcy proceedings.
Riot Platforms led bitcoin miners early Friday with a 3.9% gain. CleanSpark jumped 2.3% after advancing 3.9% premarket. Marathon Digital rose 1.3%. MARA stock climbed 2.8% before the opening bell.
Crypto exchange Coinbase advanced 2.5% Friday morning to push above its 50-day line.
Bitcoin Halving Countdown
As of Friday morning, there were fewer than 70 blocks to mine before the next halving. About 99.97% of the required blocks are already mined, according to data from Mempool.space. Mempool.space tracks block mining activity for the bitcoin network, and it's a handy tool for those interested in just when the halving occurs.
What Are Blocks?
To understand mining and blocks, it's helpful to first understand the bitcoin network and blockchain. The bitcoin network is a peer-to-peer decentralized network that governs the bitcoin blockchain, which is essentially a digital ledger that documents cryptocurrency transactions.
The network is made up of computers across the globe, known as nodes. Miners use these nodes to mine bitcoin, and they are the backbone of the network. Mining is the process that generates new cryptocurrency coins and verifies new transactions.
The bitcoin network uses a proof-of-work consensus algorithm for mining. Consensus algorithms, called protocols, are the rules for governing crypto networks. Proof-of-work protocols award miners for processing and validating transactions. The protocols solve complex math problems that require a massive amount of computing power.
The data produced by that work, as well as other bitcoin network data, is stored in bundles known as blocks. Each block is encrypted using a function, called a hashing function, that assigns it a specific hash value. These hash values look like strings of numbers and letters.
Miners compete to be the first to discover the "correct" hash value, thereby validating the block. Once the other nodes in the network confirm the solution, the block gets added to the ledger. The winning miner receives fees for processing the transactions or bitcoin awards in the case of newly minted coins.
Meanwhile, miners use the block itself to hash new transactions for the next block, which forms a chain known as the blockchain.
The Bitcoin Halving
Halving events reduce by 50% the amount of crypto rewards doled out to miners. The process was set out by Satoshi Nakamoto, the cryptocurrency's reputed creator, in the original bitcoin white paper published in 2008. Bitcoin "miners" receive rewards for verifying its transactions and creating blocks. In the process, they also "create" bitcoins.
A halving means the reward to miners is cut in half. Some refer to the events as "halvenings," a blend of "halving" and "happening."
Halving the mining reward helps control the rate at which new bitcoins are created. The total bitcoin supply is capped at a maximum of 21 million bitcoins.
The upcoming halving will cut mining rewards to 3.125 bitcoin per block. The last bitcoin halving event occurred in May 2020, when mining rewards fell to 6.25 bitcoin per block mined, down from 12.5 bitcoin per block.
Halving events occur after every 210,000 bitcoins are mined. That takes roughly four years. The price of bitcoin has historically risen in the months after halving events. That's because demand remains largely the same, while decreased mining rewards mean the creation of new bitcoins slows.
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