Mining difficulty refers to the computing power required to solve complex mathematical equations for unlocking new Bitcoins. The upcoming code change for Bitcoin (BTC) scheduled for April 20 will mark the conclusion of the latest mining difficulty update before the halving. Mining difficulty has been steadily increasing since May 2021.
Block rewards are the primary source of income for miners, and the upcoming reduction in reward to 3.15 BTC will also halve daily Bitcoin issuance from 900 to 450. Bakhrom Saydulloev, Mercuryo product lead, suggested the possibility of a short to mid-term price retracement resulting from miners selling off their BTC holdings. Historical data indicates that Bitcoin prices typically experience a decrease immediately after a halving, but trigger bull runs in the medium to long term.
The 50% reduction in block rewards may lead some miners to sell their BTC holdings to cover operational costs, potentially affecting market sentiment. Saydulloev noted that previous halving events occurred during favorable economic and investment climates, while the current uncertain trajectory around crypto regulations could impact market dynamics. Conversely, sentiment suggests that the introduction of spot Bitcoin ETFs could encourage increased investment in the cryptocurrency, potentially incentivizing cash flow into Bitcoin.
