Erik Weijers, a month ago

12 months until the next Bitcoin halving

We’re less than 12 months away from the coming Bitcoin halving, which is expected in the final week of April 2024. A nice time to take the pulse of the Bitcoin network. How is it doing in terms of transactions, hash rate, transaction fees? And how is the price doing compared to previous cycles? 

At the time of writing this article, the Bitcoin network has churned out 787.920 blocks. On average, every ten minutes a new block is added. Since the next halving will arrive at block 840.000, the halving will come in another 8.679 hours, or another 361 days, or around April 27th 2024. It will mark the beginning of the 5th so-called epoch, in which the amount of BTC that is issued per block will be cut in half to 3.125 per block.

Let’s compare some current data (inspired on a post from Bitcoin Alpha) to those of the end of the previous epoch, in May 2020. And keep in mind that the current epoch still has 12 months to run. 

  • BTC Price: 28 thousand dollars versus around 9 thousand in May 2020. Healthy price increase.
  • Number of BTC addresses: the number of Bitcoin addresses is 50% higher than at the start of the current epoch. Not super impressive.
  • The dollar value of the sum of all settled transactions: 95 billion versus 12 billion in the previous epoch. Nice!
  • Hashrate growth: this is the total computing power that miners deploy. It currently is 175% higher compared to the prior epoch: a healthy growth figure.
  • Miner revenue from fees: 50% higher compared to the previous epoch. Not super great.

Let’s pause at the latter figure. As the block subsidy will trend to zero (after all, it’s cut in half every 4 years), the miners will have to rely on transaction fees: voluntary fees that people attach to their transaction to encourage miners to include it asap.

Hope for transaction fees from Ordinals

Transaction fees have been a constant worry for some Bitcoiners (and critics of Bitcoin): if everyone just hodls, transaction fees won’t reach levels that can sustain the security of the Bitcoin protocol in the distant future. 

Enter The Ordinals protocol (which allows for the creation of Bitcoin NFT’s). It has only been in use since January 2023. But already 2.8 million NFT’s have been minted, coming with 7 million dollars in fees paid to mint these images and – more recently - text on the Bitcoin blockchain. Currently, roughly 25% of the fees for Bitcoin transactions comes from Ordinals. And the trend is up: daily fees have reached a fresh all-time high on May 2nd. This is not to say that Ordinals will save Bitcoin, but it goes to show that unexpected things can happen that drive new demand and make sure the Bitcoin network stays healthy.

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