Key highlights
- Bitcoin halving is a mandatory event when the Bitcoin mining reward gets halved.
- Halving in Bitcoin occurs every four years after 210000 Bitcoin blocks get mined.
- All the previous halving events have brought significant price movements for Bitcoin.
- The next Bitcoin halving will occur in the year 2024.
Bitcoin has many exemplary features that make it unique. However, halving is one masterstroke of Bitcoin that makes it the finest.
Halving is an event associated with some cryptocurrencies when their crypto mining reward reduces by half.
This blog is prepared to give an in-depth understanding of this halving concept.
Bitcoin Halving
Bitcoin halving is a prefixed event that takes place every four years to reduce the Bitcoin mining rewards.
As we know, Bitcoin does not have any controlling authority or institution to control its demand and supply. Instead, the founder of Bitcoin, Satoshi Nakamoto, decided the total supply of Bitcoin to be 21 Million. Satoshi programmed Bitcoin uniquely, under which the new bitcoins keep coming into the market as mining rewards.
Since the maximum number of Bitcoins is only 21 million, its mining reward keeps reducing with time. After every four years, the bitcoin mining rewards get reduced by 50% to maintain the supply of Bitcoin. The event when this reduction in rewards happens is called Bitcoin Halving.
For example, if we assume that a Bitcoin miner was getting 2 Bitcoin for bitcoin mining in 2010. This reward will become 1 Bitcoin after four years due to Bitcoin halving in 2014. It means miners will get 1 Bitcoin as a reward for every successful mining till the next halving event.
Now, since you have understood what Bitcoin halving is, let’s have a look at some commonly asked questions about it.
When was the last bitcoin halving?
The last Bitcoin Halving took place on May 11 2020. Bitcoin reward was 12.5BTC before this halving, which was reduced to 6.25 BTC in 2020. This halving took place after 630,000 blocks of bitcoin were mined. It was the third Bitcoin halving out of a total of 32 total halvings that will ever take place in Bitcoin.
When will the next Bitcoin halving take place?
The next Bitcoin halving will take place in the year 2024. It will happen when miners mine 840,000 bitcoin blocks in total. This halving will reduce the bitcoin mining reward from 6.25 BTC to 3.125 BTC.
How does Bitcoin halving affect the price of Bitcoin?
Every Bitcoin halving reduces the number of new bitcoins that come to the market by 50%. It means that the supply of Bitcoin gets directly affected by the halving process. Let us consider the demand and supply economics that control a cryptocurrency's price. Lesser supply increases the demand, which affects the price of Bitcoin positively. In short, the prices of bitcoin generally rise after the halving effect.
Historically, all three Bitcoin halving events have resulted in significant price surges in Bitcoin along with many profitable crypto trading opportunities.
Let us have a quick analysis of previous bitcoin halving 2024 dates and prices.
1st Bitcoin Halving
It occurred on November 28 2012, after 210000 Bitcoin blocks got mined. It changed the Bitcoin block reward from 50 BTC to 25 BTC. As an aftereffect of this halving, Bitcoin price skyrocketed from $12 to $1,031.95 in a year. It was a splendid rise of 8500% in Bitcoin prices.
2nd Bitcoin Halving
The second bitcoin halving took place on July 9, 2016, after miners mined 420,000 bitcoin blocks. During that time, Bitcoin's price was around $650. One month after this halving, the bitcoin price dropped to $533 in August. However, it began to rally upward, hitting the $2518.4 mark after a year. It got followed by an even faster rise in the next five months when BTC hit its new ATH of $20,089 on December 17, 2017. It was a growth of 2990% in less than two years.
3rd Bitcoin Halving
It happened on May 11, 2022, after 6,30,000 blocks got mined. Within a year, the Bitcoin price surged from $9000 to almost $66,000. However, other factors like institutional investments and the announcement of Paypal to enable its users to buy and hold BTC also contributed to this 2020 bull run of Bitcoin.
Even though we have been experiencing an increase in Bitcoin price after every halving, it is not necessarily true every time. As you must have noticed, Bitcoin has not followed any specific price trajectory after its halving events. The market reaction and other contemporary events combine to decide the price movement of Bitcoin.
What will happen after the last Bitcoin halving?
Satoshi seemed to have a very farsighted vision of his invention because he had everything planned for Bitcoin.
After the miners mine all 21 million bitcoins, they will not receive any block reward or newly minted Bitcoins. But they will be incentivized through the transaction fees collected by users of the Bitcoin network. This fee will depend on the bitcoin network of that time, which will decide the on-chain transaction fee of Bitcoin.
Is bitcoin halving good or bad?
Halving is an essential attribute in giving value to Bitcoin. It is crucial to maintain Bitcoin's supply and demand dynamics in the crypto space. Unlike traditional currencies, which are not inflation resistant, Bitcoin can prove inflation resistant with its halving practice. This is because a scheduled halving lowers the inflow of new bitcoins, which increases the value of existing coins.
It also makes Bitcoin a unique store of value asset which can handle inflationary pressure well. However, halving may encourage Bitcoin holders to hold their bitcoins instead of spending them in the hope of a possible price increase. But from an investment point of view, halving is an excellent characteristic of many crypto coins and tokens for earning high returns.
