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What's the Buzz with Bitcoin?

Bitcoin just had its own version of a blockbuster event: The Halving! But don't worry, it's not  as spooky as it sounds.

Instead, it's a major milestone in the world of digital currency that happens roughly every four years. This event shakes up the creation of new bitcoins, making waves in the cryptocurrency community.

So, what exactly is the halving? Well, let's break it down.

When people "mine" bitcoins, they're basically solving complex math problems using powerful computers. When they solve these problems, they're rewarded with bitcoins. However, with each halving, the reward for solving these problems gets slashed in half. This means that fewer new bitcoins are entering the market, making them more scarce.

Bitcoin in front of falling stocks

Why does this matter?

Supply and Demand: With the halving, the rate at which new bitcoins are created is reduced, effectively slowing down the supply.  Limited supply is one of the things that make bitcoin valuable. There will only ever be 21 million bitcoins, and most of them (19 million) have already been mined. With each halving, the rate at which new bitcoins are created slows down, which can potentially drive up their value.

The impact of the halving on bitcoin's price.

Historically, after each halving, the price of bitcoin has tended to go up. However, it's important to note that past performance doesn't guarantee future results. The halving is just one factor among many that can influence the price of bitcoin.

We don’t know how significant we can say halving is just yet

Author
Adam Morgan McCarthy, a research analyst at Kaiko.

Now that the latest halving has happened, experts like McCarthy argue that there are a few other things at play that could contribute to a potential price increase this time around, halving or no halving. 

For one, there's been an explosion in the adoption of Bitcoin, with a surge in both retail investors and institutional giants like Wall Street firms jumping on board. This wave of adoption has Bitcoin smashing through record barriers, soaring past the $70,000 mark. Additionally, the launch of bitcoin exchange-traded funds (ETFs) has increased demand for the digital currency.

But what about the environmental impact of bitcoin mining?

Mining requires a lot of energy, and some are concerned about its carbon footprint. Recent research published by the United Nations University and Earth’s Future journal found that the carbon footprint of 2020-2021 bitcoin mining across 76 nations was equivalent to emissions of burning 84 billion pounds of coal or running 190 natural gas-fired power plants. 

However, there are efforts to use more renewable energy sources to mitigate these environmental concerns.

Bitcoin mining farm

As the dust settles on this latest halving event, one thing is clear: Bitcoin continues to capture the imagination of investors and enthusiasts alike. Whether you're a seasoned trader or simply curious about the future of finance, staying informed about developments like the halving is crucial.

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