The halving of Bitcoin happened 11 May 2020 and since then, one can notice the first short-term consequences. Interestingly enough, some of them are not caused by halving directly but rather follow the event because of the behavior of Bitcoin holders and miners. Let’s look at why Bitcoin got slow and if it is halving to blame first.
The decrease of transaction speed was noticed by many market players with some thinking it’s the problem of the wallet client they are using. In actuality, the blockchain of Bitcoin is a decentralized ecosystem: all programs connected to it rely on this infrastructure. What’s really behind the decrease is the increased usage of Bitcoin blockchain that could be witnessed 14 days before halving occurred.
A fee per every transaction has also grown: on May 14, the average fee was making $5.16, a number not seen since June 2019. The cost of any transaction in the blockchain has grown 168%. This is explained by two factors:
- the aforementioned usage increase
- some miners leaving the network
The second factor requires additional explanation. Some miners quit Bitcoin mining because after halving, the block reward for mining was decreased from from 12.5 to 6.25 BTC and they need to either reconfigure their existing mining apparatus or buy new ones to cover the costs. The existing gap was not filled yet which led to the growth of demand for miners who, as most Bitcoin fans reading this material already know, are responsible for processing transactions in the blockchain.
Although the price of Bitcoin has not jumped 168% like it happened with the cost of each transaction in the network, it has remained in a good price corridor for people who invested in Bitcoin at the beginning of the year. Not falling under $8000, the price of Bitcoin has demonstrated a steady growth of approximately +13% during the first week after halving.