The Bitcoin (BTC) halving is a pivotal event in the network, and the next one is just around the corner in April 2024. Currently, we’re 86% of the way there.
Bitcoin halving is a fixed event on the blockchain where the mining reward per block is cut in half. For instance, in the 2020 halving, miners received 12.5 BTC per block, which then dropped to 6.25 BTC. In 2024, it will further decrease to 3,125 BTC. This occurs approximately every four years, or after every 210,000 mined blocks.
Bitcoin halving reduces the creation of new bitcoins, acting as a built-in defense against inflation and increasing Bitcoin’s scarcity. This mechanism ensures that the total number of bitcoins will never exceed 21 million.
Historical data suggests a fascinating relationship between Bitcoin’s price and halving events. Typically, Bitcoin’s value dips just before a halving and then soars to new heights. While this trend indicates potential long-term gains for investors who are patient, it’s important to remember that past performance doesn’t guarantee future results. Comprehensive market analysis is vital before making investment decisions.
Mining Bitcoin demands substantial energy and advanced equipment. When mining rewards are halved, profitability can be at risk, especially if Bitcoin’s price doesn’t rise sufficiently to offset the reduced rewards. This could lead to a survival-of-the-fittest scenario, with only the most efficient mining operations thriving, while those with outdated hardware struggle to stay profitable. While a decrease in active miners might temporarily affect the network’s total computing power, it hasn’t raised significant security concerns in previous halvings.
Bitcoin halving, occurring roughly every four years, is a significant event in the BTC network, designed to combat inflation and enhance scarcity. Historical patterns indicate a positive price movement surrounding halvings. Nonetheless, the reduced rewards post-halving may strain miners, potentially impacting the network’s overall computing power, though major security issues have yet to emerge.
Lesley Woutersen, one of the co-founders of the EconomicInform gives away all of his free time to the project. He is interested in stock exchange and digital assets. Lesley can be reached by lesley.woutersen@economicinform.com.
