Bitcoin Halving: Everything You Need to Know

Bitcoin halving is one of the most anticipated events in the cryptocurrency world. It is a process that reduces the amount of new bitcoins created and distributed to the miners who secure the network. But what exactly is bitcoin halving, why does it happen, and how does it affect the price of bitcoin? In this article, we will answer these questions and more.

What is Bitcoin Halving?

Bitcoin halving is an event that occurs every 210,000 blocks, or approximately every four years, on the Bitcoin network. It is a mechanism that ensures that the total supply of bitcoins will never exceed 21 million, as specified by the protocol.

When bitcoin was launched in 2009, the initial reward for mining a block was 50 bitcoins. This means that every 10 minutes¹, 50 new bitcoins were created and given to the miner who solved a complex mathematical problem and validated a group of transactions. However, this reward is not fixed. It is programmed to decrease by half every 210,000 blocks.

The first bitcoin halving occurred in November 2012, when the block reward dropped from 50 to 25 bitcoins. The second halving took place in July 2016, when the reward was reduced to 12.5 bitcoins. The third and most recent halving happened in May 2020, when the reward became 6.25 bitcoins per block.

The next halving is expected to occur in April or May 2024, when the reward will fall to 3.125 bitcoins per block.

Why Does Bitcoin Halving Occur?

Bitcoin halving occurs because of the design of the Bitcoin protocol, which was created by an anonymous person or group under the pseudonym Satoshi Nakamoto. Nakamoto wanted to create a digital currency that is decentralized, scarce, and deflationary.

Decentralization means that no central authority or intermediary can control or manipulate the supply or distribution of bitcoins. Instead, bitcoins are created and transferred by a network of nodes that run the Bitcoin software and follow a set of rules called consensus.

Scarcity means that there is a limited amount of bitcoins that can ever be created. Unlike fiat currencies that can be printed at will by governments or central banks, bitcoins have a fixed cap of 21 million. This makes them more resistant to inflation and devaluation.

Deflation means that the value of each bitcoin tends to increase over time as the supply decreases and the demand increases. This creates an incentive for people to save and invest in bitcoins rather than spend them.

Bitcoin halving is a way to enforce these properties and ensure that bitcoin remains a sound and sustainable form of money.

Why Does Bitcoin Halving Matter?

Bitcoin halving matters because it affects the supply and demand dynamics of the bitcoin market. By reducing the rate at which new bitcoins are created, halving lowers the inflation rate of bitcoin and increases its scarcity. This can have a positive impact on the price of bitcoin, as long as the demand for it remains steady or grows.

Historically, bitcoin halving has been associated with some of the biggest bull runs in bitcoin’s history. For example, after the first halving in 2012, the price of bitcoin increased from $12 to $127 in 150 days. After the second halving in 2016, the price rose from $650 to $758 in 150 days. And after the third halving in 2020, the price soared from $8,566 to $63,346 in one year.

However, correlation does not imply causation, and there are many other factors that influence the price of bitcoin besides halving. These include market sentiment, adoption, regulation, innovation, competition, geopolitics, and more. Therefore, it is impossible to predict with certainty how halving will affect the price of bitcoin in the future.

Bitcoin Halving History and Dates

Here is a table that summarizes the history and dates of past and future bitcoin halvings:

Halving	Block Height	Date	Reward Before	Reward After	Price on Halving Day	Price 150 Days Later
Launches	0 (genesis block)	3 Jan 2009	50 BTC	50 BTC	N/A	N/A
1st	210,000	Nov 28, 2012	50 BTC	25 BTC	$12.35	$127
2nd	420,000	Jul 9, 2016	25 BTC	12.5 BTC	$650.63	$758.81
3rd	630,000	May 11, 2020	12.5 BTC	6.25 BTC	$8,566	$15,800
4th	840,000	Apr/May 2024	6.25 BTC	3.125 BTC	?	?
5th	1,050,000	Mar/Apr 2028	3.125 BTC	1.5625 BTC	?	?
…	…	…	…	…	…	…
33rd	6,930,000	2140	0.00000001 BTC	0 BTC	?	?

How Does Halving Influence Bitcoin’s Price?

Halving influences bitcoin’s price by affecting the balance between supply and demand. On the supply side, halving reduces the amount of new bitcoins that enter the market, making them more scarce and valuable. On the demand side, halving can increase the interest and awareness of bitcoin, attracting more buyers and investors.

However, the exact impact of halving on bitcoin’s price depends on various factors, such as:

• The expectations and reactions of market participants. Some people may buy bitcoin before or after halving, anticipating a price increase or decrease. Others may sell bitcoin before or after halving, taking profits or avoiding losses. These actions can create volatility and speculation in the market.
• The cost and profitability of mining. Halving reduces the income of miners, who are responsible for securing the network and processing transactions. If the price of bitcoin does not increase enough to compensate for the lower reward, some miners may stop mining or switch to other cryptocurrencies. This can affect the hash rate and difficulty of the network, as well as the security and speed of transactions.
• The innovation and competition in the industry. Halving can stimulate the development and adoption of new technologies and services that improve the efficiency and usability of bitcoin. For example, halving can encourage the use of scaling solutions, such as the Lightning Network, that enable faster and cheaper transactions. Halving can also inspire the creation and growth of new cryptocurrencies that compete with or complement bitcoin.

Bitcoin Halving Countdown

A countdown timer for the Bitcoin halving can help you keep track of how much time is left until this important event.

Bottom Line

Bitcoin halving is a periodic event that cuts the reward for mining a block in half. It is a mechanism that ensures that the total supply of bitcoins will never exceed 21 million, making them scarce and deflationary. Bitcoin halving affects the supply and demand dynamics of the bitcoin market, which can influence its price. However, there are many other factors that affect the price of bitcoin besides halving, making it difficult to predict its future performance.

1. Bitcoin Whitepaper. Bitcoin: A Peer-to-Peer Electronic Cash System ↩︎