A halving, which occurs when the number of new bitcoins—and the incentive for mining them—is cut in half, is one of the most significant occurrences on the blockchain of Bitcoin. Each halving slows the rate of inflation, which raises the price of bitcoin.
As of 2023, those who participate in the Bitcoin blockchain network by processing and validating transactions using their computers as Bitcoin miners get 6.25 bitcoins (BTC) for each block they successfully mine.
In this article, we will go over everything that you need to know about Bitcoin halving – including what it is, the next Bitcoin halving, why it’s happening, and how you can trade it.
What Is Bitcoin Halving?
Bitcoin halving is an event where the reward for mining new Bitcoin blocks is cut in half, resulting in miners receiving 50% fewer Bitcoins for verifying transactions. Bitcoin halving occurs every 210,000 blocks which translate to approximately every 4 years.
In other words, this is Bitcoin's way of using a synthetic form of inflation that halves every four years until all Bitcoin is released and is in circulation.
How Does Bitcoin Halving Work?
Bitcoin halving works because of its network's underlying blockchain technology software which dictates the rate at which new Bitcoins are created. The software requires computers in the blockchain network to compete to verify transactions known as Bitcoin mining.
Bitcoin mining rewards the miners with several new Bitcoins when they can prove that the transactions that have been selected by them are valid. These transactions are verified in groups known as blocks, and the blockchain network is coded to halve the reward received by miners every 210,000 blocks.
What Is The Significance Of Bitcoin Halving?
Bitcoin halving decreases the number of new Bitcoins that are generated per block which lowers the supply of new Bitcoins, thus making the purchase price of the coin more expensive.
Going by the general rule of Economics—lower supply with steady demand is supposed to result in higher pricing. Halving usually precedes some of Bitcoin's largest runs as it reduces the supply of new Bitcoins while the demand remains steady.
What Is A Bitcoin Halving Chart?
A Bitcoin halving chart is used to study Bitcoin's inflation rate within a specific time period. It also shows how much Bitcoin's inflation rates are lowered with each halving.
Bitcoin Halving Dates: Next Bitcoin Halving
Now that we have gone over everything there is to know about Bitcoin halving, the most obvious question that comes to mind next is "When is Bitcoin halving?" The answer to when the next Bitcoin halving dates cannot be predicted as they depend on block height.
But we do know that halving happens every 210,000 blocks, so the next Bitcoin halving date is estimated to occur in 2024 on block 840,000.
What Is The Impact Of Bitcoin Halving On Bitcoin's Price?
Though already stated that Bitcoin halving could result in higher prices, one cannot ascertain the impact halving would have on the future price of Bitcoin. Investors believe that price movements follow a similar pattern to previous halving events.
However, after future halving events, Bitcoin's price will depend on how its demand shapes up throughout the halving.
It is important to know that demand does not necessarily mean that there will be an increase in price or even a stagnant price. The crypto market has been maturing significantly since the last halving in 2016, and there are now more cryptocurrencies competing for users.
Bitcoin Halving Dates So Far
Let’s quickly take a look at the previous Bitcoin halving events and patterns.
2012 Bitcoin Halving
The first halving happened on November 28th, 2012.
- New Bitcoin per block (Before): 50 BTC per block
- New Bitcoin per block (After): 25 BTC per block
- Price on Halving Day: $12.35
- Price 150 Days Later: $127.00
2016 Bitcoin Halving
The second halving occurred on July 9th, 2016.
- New Bitcoin per block (Before): 25 BTC per block
- New Bitcoin per block (After): 12.5 BTC per block
- Price on Halving Day: $650.63
- Price 150 Days Later: $758.81
2020 Bitcoin Halving
The third halving occurred on May 11, 2020.
- New Bitcoin per block (Before): 12.5 BTC per block
- New Bitcoin per block (After): 6.25 BTC per block
- Price on Halving Day: $8821.42
- Price 150 Days Later: $10,943.00
In the following table, we have summarized the patterns of Bitcoin halving events into categories like block number, block rewards, and percentage of Bitcoin mined.
Expected Next Bitcoin Halving Dates: 2024 and Beyond
When is the Next Bitcoin Halving in 2024?
- Expected: May 01, 2024
- Block number: 740,000
- Block reward: 3.125 new BTC
- Total new Bitcoins: 656,250 BTC
When is the Next Bitcoin Halving in 2028?
- Expected: 2028
- Block number: 850,000
- Block reward: 1.5625 new BTC
- Total new Bitcoins: 328,125 BTC
In this table, we have listed the upcoming Bitcoin halving events and categorized them into block number, block reward, and percentage mined.
From the above table, it can be determined that the amount of Bitcoin mined and the block reward drops by half at every Bitcoin halving event.
Over 99% of Bitcoin will have been mined by 2032 and crypto analysts estimate that by 2140, 100% of the total amount of Bitcoin will be mined.
What Is The Bitcoin Block Reward In 2021?
At present, the Bitcoin block subsidy is 6.25 BTC per block. The subsidy will drop to 3.125 Bitcoins (BTC) per block when block 840,000 is hit in 2024.
Tips To Trade During Bitcoin Halving
There are two ways to trade during Bitcoin’s halving.
- Speculate on the price of the cryptocurrency using derivatives such as CFDs
- Buy the coins outright via an exchange
Trading cryptocurrencies with derivatives such as CFDs enables you to:
- Trade without an exchange account or wallet
- Go long or short
- Take advantage of leverage
What modifies with the Bitcoin halving?
The operation of the halve hypothesis and the domino effect it starts is explained as follows:
The reward is lowered by half, inflation is decreased by the same amount, the supply is decreased, the demand is increased, and the price is raised. Despite receiving less compensation, miners are nonetheless driven by Bitcoin's increasing value.
In the event that a halving would not increase demand and price, miners would be unmotivated. Transaction completion incentives would be reduced, and the value of Bitcoin would not be enough.
Bitcoin has a method for changing how difficult it is to mine a transaction or receive mining incentives in order to prevent this.
If the reward was cut in half but the price of Bitcoin did not increase, the difficulty of mining would be reduced to keep miners interested. As a consequence, transaction processing is now easier, even if there are still fewer bitcoins awarded as incentives. This approach has been successful twice.
As an illustration, during the 2017–2018 bubble, the price of a bitcoin increased to over $19,000 before dropping to about $3,700. The price of a bitcoin before the halving was over $650, so this is a significant decrease.
Although this approach has worked thus far, the halving is often surrounded by tremendous speculation, hype, and volatility, and how the market will respond to these events in the future is unclear.
In addition to taking place during a worldwide epidemic, the third halving also happened amid greater regulatory scrutiny, institutional investment in digital assets, and celebrity hype. These extra considerations make it difficult to predict where the price of bitcoin will finally settle.
The Bottom Line
Even though there’s nothing that can be done during or after the Bitcoin halving countdown, it’s always a good idea to find a reliable platform that has a proven track record to trade Bitcoin. It is also important to follow patterns of previous halving events for a clearer understanding of what's to come.
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