Key Takeaways:
The next block reward halving for Bitcoin is likely to occur in approximately two days, around April 19th or 20th. This technical event, embedded in the cryptocurrency’s code, happens every four years and this is when the rewards gained by miners for producing blocks on the blockchain are cut in half, thus reducing the number of new Bitcoins that enter the market.
The total supply of Bitcoin is capped at 21 million tokens. While the available supply of conventional currencies rises and falls under the watchful eyes of global central banks, Bitcoin’s supply is fixed and immutable.
At present, a few more than 19 million BTC have been mined, leaving just under 2 million more left to be produced. Halving is one of the most important features of the apex cryptocurrency and is what makes it a more scarce and desirable asset.
What is Bitcoin Halving?
To put it simply, halving is when the reward gained from mining Bitcoin is cut in half. The event takes place on the blockchain once every four years.
The code for halving is written into Bitcoin’s mining algorithm and is aimed at protecting the cryptocurrency’s value from inflation by maintaining scarcity in its supply. The theory is that by reducing the pace at which new Bitcoins are issued, their price will increase, subsequently creating more market demand for the token.
According to Chris Kline, COO of the crypto IRA retirement platform Bitcoin IRA, this production scarcity is what defines Bitcoin’s finiteness, and when the reward is lower, its supply is constrained.
How Does Bitcoin Halving Work?
Mining is a process that involves a decentralized network of validators verifying all transactions that take place on the Bitcoin blockchain. They are working constantly to solve a complex mathematical puzzle, at the end of which a group of transactions are added to the blockchain. This is an integral part of Bitcoin’s proof-of-work (PoW) consensus mechanism.
The miner who becomes the first to solve the equation and add transactions to the block is paid 6.25 BTC as a reward. This amount, worth $385,618 at current prices, is a clear way of incentivizing them to make sure the network and its transactions are running smoothly.
New blocks of transactions are added to the chain roughly every 10 minutes, and the reward for miners for doing so is reduced by half after every 210,000 blocks. This happens in a four-year cycle and is often accompanied by heightened volatility for Bitcoin’s price.
When did the First Bitcoin Halving Take Place?
The first reward-halving event for Bitcoin took place in November 2012. During Bitcoin’s inception in 2009, the subsidy for mining stood at 50 BTC per block. At today’s price, that would be worth a cool $3.06 million. This number was halved each time the event took place, in a four-year cycle.
For instance, after the first halving, the reward for mining Bitcoin dropped from 50 BTC to 25 BTC per block.
The second halving was in July 2016, when the reward was reduced to 12.5 BTC per block, while the most recent halving was in May 2020, which saw the number fall to its current rate of 6.25 BTC per block mined.
Under current figures, an estimated 900 BTC enters into circulation daily. This number is expected to drop to 450 BTC per day after the upcoming halving.
The last halving will occur in 2140, at which point, all 21 million Bitcoins will be in circulation and no more coins will be left to mine. From there on, miners will simply be paid the network fees for managing the blockchain.
When is the Next Halving and What to Expect From it?
The Bitcoin network dictates halving based on current transaction rates. At the current rate of mining, the halving is expected to occur sometime between 19th and 20th April.
Halving dates are not pre-determined and can only be predicted. Any acceleration of the transaction rate on the blockchain will bring forward the halving date. Experts say that the somewhat predictable nature of Bitcoin halvings was designed so that it does not come as a shock to miners and users.
However, this doesn’t mean that there won’t be any trading frenzy surrounding the next halving. Rob Chang, CEO of privately held Bitcoin miner Gryphon Digital Mining, noted that historically, there has been a lot of price volatility in the lead-up to and after a halving event. However, the price of BTC typically ends up significantly higher a few months after the event, he said.
Although several factors influence the price of Bitcoin, the halving event is generally viewed with a bullish sentiment once the initial volatility settles. Experts say investors should be cautious about the next halving because even though the scarcity of the digital asset could drive price appreciation, reduced mining activity could cause its price to level off.
Conclusion
The key point for Bitcoin investors to consider isn’t the specific dates at which halving occurs but the growth of the overall network. As long as the blockchain continues to grow, the likelihood of Bitcoin fulfilling its potential as a global store of value increases.
Today is April 18, 2024, and the world’s largest cryptocurrency by market capitalization is changing hands at $61,209 – up 4.3% in the last 24 hours.
More News: Bitcoin Miners On The Race To Obtain The Million-Dollar Worth First Satoshi After Halving
