The Bitcoin network was built upon a mechanism known as the “halving”. This event, which occurs approximately every four years, reduces the number of new Bitcoins produced every four years to keep BTC relatively scarce. The intentional scarcity maintained by this mechanism aims to regulate inflation and possibly influence the value of BTC tokens. With the last halving occurring in 2022, traders and investors are left wondering – When is the next Bitcoin halving happening? We covered all you need to know.
What is Bitcoin halving?
Bitcoin halving is simply a pre-scheduled where the reward miners earn for mining new blocks is automatically decreased by 50%. So, miners will only earn half the number of BTC per mined block after a halving event. Designed to occur every 210,000 blocks, halvings will keep occurring until the maximum total supply of 21 million BTC is depleted. Since halving occurs every 210,000 blocks, it is estimated to take place roughly every four years.
Why does Bitcoin halve?
Bitcoin halves because of the software design it was built with. The creator of the Bitcoin network, ‘Satoshi Nakamoto’ designed halving to be a part of the network.
Although Satoshi didn’t clearly state the justifications for halvings, some experts believe it helped distribute BTC coins faster, especially at the beginning. They believe that halving served as an incentive for people to join the Bitcoin network and become miners of new blocks.
Under this view, block rewards were designed to halve at periodic intervals because the actual value of each BTC reward was considered likely to rise as the network expanded.
Another theory here is that the halvings were designed to bring up deflationary measures into BTC, therefore, the number of new coins miners receive per block is pre-determined. Hence, the risk of BTC losing its value is considerably reduced. So in this case, halving is in some way, a precautionary measure against inflation.
What happens when Bitcoin halves?
When Bitcoin halves, the reward for mining a new block is slashed in half. This decreases the rate at which new coins are created, thereby diminishing the inflation rate of the token. Halving happens roughly every four years and is an integral part of Bitcoin’s regulated supply.
How does Bitcoin halving work?
Essentially, bitcoin halving is incorporated into BTC network’s underlying blockchain software, which determines the rate at which new coins are created. The BTC software needs powerful computers in the network to compete to verify transactions. This process is known as ‘mining’ and it involves miners competing with each other to validate transactions. Successful miners get rewarded with a specific number of new Bitcoins.
Transactions on the network are verified in groups known as ‘blocks’ and the network is designed to halve the reward miners earn every 210,000 blocks.
There have been only three halving events since the creation of Bitcoin. Here is a review of the previous three halvings:
1. 2012 halving
The first Bitcoin halving happened on November 28th, 2012. This event occurred when the mining block got mined by SlushPool by somebody making use of a Radeon HD 5800 miner.
New BTC Per Block Before: 50 BC per block
New BTC Per Block After: 25 BTC per block
Price on Halving Day: $12.35
Price 150 Days Later: $127.00
2. 2016 halving
The second Bitcoin halving occurred on July 9th, 2016, and split the reward miners earned in half.
New BTC Per Block Before: 25 BTC per block
New BTC Per Block After: 12.5 BTC per block
Price on Halving Day: $650.63
Price 150 Days Later: $758.81
3. 2020 halving
The third Bitcoin halving occurred on May 11, 2020.
New BTC Per Block Before: 12.5 BTC per block
New BTC Per Block After: 6.25 BTC per block
Price on Halving Day: $8821.42
Price 150 Days Later: $10,943.00
What is the impact of previous halvings?
Historically, halving events have been followed by substantial price increases, however, repetition is not guaranteed. Here’s a brief overview of the price increases:
2012 Halving: The price of BTC increased from $12 to $1,100 within a year.
2016 Halving: The price of BTC increased from $400 to $20,000 within two years.
2020 Halving: The price of BTC increased from $9,000 to $66,000 within one year.
What are the potential implications of Bitcoin halving?
The forthcoming BTC halving may have several likely consequences. Some of these consequences include:
1. Increased mining difficulty
With fewer Bitcoins available after the halving, miners may need to use more powerful hardware to compete with themselves. This will likely lead to higher electricity consumption.
2. Market volatility
The halving event could initiate increased price volatility just over the short term, as crypto investors respond to the new supply dynamics.
3. Investor interest
This event may also attract new investors who may be interested in the possible price increase due to restricted supply.
What happens to miners when the Bitcoin reward is halved?
When halving occurs and the block reward is slashed, many things can happen. Some miners may believe that their mining efforts will no longer be profitable because of high costs such as electricity and hardware. Others may even stop mining completely if the price of Bitcoin doesn’t increase to compensate for the halving, decreasing the amount of processing power in the BTC network. Whatever happens next, the speed at which blocks get mined is likely not to be affected. This is because the Bitcoin software automatically modifies the difficulty of verifying block transactions to sustain a steady rate.
Will Bitcoin halving increase BTC’s price?
Based on historical patterns, the price of Bitcoin generally increases considerably after halving events. However, due to the extreme volatility of the crypto market, note that this pattern is not guaranteed and doesn’t reflect future price movements. Price trends after the 2024 BTC halving event will primarily depend on adoption as well as other factors influencing BTC demand.
Why is halving important?
Halving is important for the Bitcoin network because it influences the rate at which new tokens are created and released into circulation. With consecutive halving events, less BTC will be created, potentially making Bitcoin more difficult to get.
Also, halving guarantees that new tokens are created at a steady pace, and provides a predictable and stable algorithm of reward changes.
What is the current Bitcoin block reward?
Presently, there are only 6.25 new Bitcoins allocated per block as rewards. However, this amount will be halved to 3.125 Bitcoins after the forthcoming 2024 halving.
Bitcoin halving: when is the next one?
The next Bitcoin halving is predicted to happen in April 2024 and will occur when the number of blocks reaches 740,000. After this event, the block reward will fall from 6.25 to just 3.125 Bitcoins. Although the exact date of the 2023 halving is still unknown, some people predict that it will take place on April 19th, 2024.
Does Bitcoin halving affect altcoins?
Bitcoin halving events usually attract the attention of investors to the cryptocurrency market, which encompasses Altcoins. Investors are likely to become more optimistic that there will be a price increase for other cryptocurrencies. This sudden excitement can cause an increase in the investment in Altcoins, forcing their prices to rise.
Also, some miners may consider mining Altcoins that offer them better rewards, since Bitcoin’s mining reward will decrease.
What happens when all 21 million Bitcoins have been mined?
When miners eventually mine the maximum supply of 21 million Bitcoins, they will no longer earn new Bitcoins for verifying blocks. Nonetheless, they will still receive transaction costs as an incentive to continue verifying transactions. This fee is usually contributed by people making payments. It is calculated that the last new Bitcoin will finally be mined in 2140. After this, Bitcoin will become deflationary as tokens can get ‘lost’ through user error – for instance, through sending coins to an invalid wallet address.
Ultimately, when is the next Bitcoin halving? The next Bitcoin halving is expected to occur in April 2024. However, it is still unsure of the exact date it will happen. Whatever happens, you need to stay informed about the latest news in the Bitcoin space and conduct your research. This way, you can make informed decisions about your crypto investments, especially with the forthcoming halving.
Emmanuel is a marketing professional who enjoys creating robust user-oriented content for organic lead generation and growth. Loves to read, travel, and play games in his free time.