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What Is Bitcoin Halving? What It Means and How It Works
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Bitcoin halving is a rule for Bitcoin reduces the rate of new Bitcoin entering the market, roughly every four years. This process is expected to continue until the year 2140 when the maximum supply of 21 million Bitcoins will be reached. The next Bitcoin halving is anticipated in April of 2024.
While each Bitcoin halving reduces the rewards for miners, it also contributes to the perception of Bitcoin as a store of value with a fixed supply. The impact of halving Bitcoin’s price is uncertain but historically associated with significant price gains.
What is Bitcoin halving?
If you’ve been in crypto long, you’ve probably heard the phrase “Bitcoin halving.” Typically it comes up in relation to price action in the broader crypto market.
The Bitcoin code has a fundamental rule of a maximum of 21 million coins. The introduction of fresh Bitcoin into circulation occurs through crypto mining, wherein miners undertake the responsibility of upholding and safeguarding the Bitcoin ledger and receive newly minted Bitcoin as their reward.
Roughly every four years, a mining reward halving takes place, leading to a reduction in the rate of new Bitcoin entering the market. This process is expected to continue until the year 2140, when the final Bitcoin is mined and no further supply is created.
Upcoming Bitcoin halving dates
Here is an estimate of upcoming Bitcoin halving dates.
| Halving Number | Date | Block Number | Block Reward | % BTC Mined |
|---|---|---|---|---|
| 4th halving | April 26th, 2024 | 840,000 | 3.125 BTC | 96.875% |
| 5th halving | approximately 2028 | 1,050,000 | 1.5625 BTC | 98.4375% |
| 6th halving | approximately 2032 | 1,260,000 | 0.78125 BTC | 99.21875% |
| 7th halving | approximately 2036 | 1,470,000 | 0.390625 BTC | 99.609375% |
| 8th halving | approximately 2040 | 1,680,000 | 0.1953125 BTC | 99.8046875% |
When is the next Bitcoin halving?
The next Bitcoin halving is set to happen at block 840,000, which is anticipated to take place on April 26, 2024. During the Bitcoin halving in 2024, the block reward will be reduced from 6.25 Bitcoin per block to 3.125 Bitcoin per block.
The Bitcoin halving in 2024 will be watched closely by the entire crypto space. The impact of halving on the price of Bitcoin is never certain, but historically the halving is associated with significant price gains.
Past Bitcoin halving events
Here’s a breakdown of the past Bitcoin halving events, from the first in 2012 through to the most recent in 2020.
| Halving Number | Date | Block Number | Block Reward | % BTC Mined | Price of BTC on Halving Day (USD) |
|---|---|---|---|---|---|
| 0 (Launch) | January 3rd, 2009 | 0 (Genesis Block) | 50 BTC | 50% | N/A |
| 1st halving | November 28th, 2012 | 210,000 | 25 BTC | 75% | $12.35 |
| 2nd halving | July 9th, 2016 | 420,000 | 12.5 BTC | 87.5% | $650.53 |
| 3rd halving | May 11th, 2020 | 630,000 | 6.25 BTC | 93.75% | $8,821.42 |
Why is Bitcoin halving important?
National central banks carefully monitor and adjust the available supply of fiat currencies, which makes fiat such as the US Dollar notably inflationary. In contrast, the total supply of Bitcoin remains fixed and unchangeable.
The maximum quantity of Bitcoin that will ever exist is approximately 21 million. At time of writing, over 19 million Bitcoins have already been mined, leaving less than 2 million yet to be created. The Bitcoin halving process periodically decreases the number of new coins earned by miners and ultimately results in a total fixed supply of Bitcoin coming into existence.
What happens when no Bitcoins remain after halving?
Once the maximum number of Bitcoins is created, there will be no further supply added. Bitcoin transactions will continue to aggregate into blocks and be processed, so Bitcoin miners will still be able to receive rewards, largely by way of transaction processing fees.
The total supply of Bitcoin isn’t expected to be mined until 2140, so it’s difficult to predict what the crypto landscape will look like then. If by 2140 the Bitcoin blockchain handles a substantial volume of transactions, Bitcoin miners may still be able to make profit solely from transaction fees.
If in the future Bitcoin primarily functions as a store of value (like gold) rather than daily use, miners could be profitable even with low transaction volumes by imposing higher transaction fees to handle large-value transactions or batches of transactions.
Frequently asked questions about Bitcoin halving
Here are answers to frequently asked questions about the Bitcoin halving in 2024 and when is the next Bitcoin halving.
How often is Bitcoin halved?
A Bitcoin halving occurs roughly every four years. As of 2023, three halvings have occurred, with the Bitcoin halving in 2024 expected in April.
What happens when Bitcoin is halved?
When a Bitcoin halving takes place, mining rewards are cut in half, which leads to a reduction in the rate of new Bitcoin entering the market. This process is expected to continue until the year 2140, when the final Bitcoin is mined.
Does Bitcoin halving increase price?
Nobody can predict price action in the crypto markets. That noted, historically Bitcoin halving events have been associated with significant price gains. The past halvings occurred in 2012, 2016, and 2020, and each one witnessed a notable surge in the price of Bitcoin in the months preceding and following the event.
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