Bitcoin is fast approaching its highly anticipated next block reward halving. The Bitcoin halving event, which occurs roughly every four years, is undeniably one of the intriguing aspects of Bitcoin.
Read on to learn about the Bitcoin halving, how it’s calculated, and what you can expect from the upcoming one.
What Is the Bitcoin Halving?
Bitcoin halving is the process of cutting mining rewards by half for every 210,000 mined blocks. The process lowers the rate at which new coins are created and added to the circulating BTC supply, which in turn lowers the inflation rate.
The halving event is expected to continue until the network generates all 21 million coins, approximately in 2140, during the 32nd Bitcoin halving event.
What Is the Purpose of Bitcoin Halving Events?
Bitcoin halving events were written into Bitcoin’s mining algorithm as a way to counter inflation by scarcity.
Once a halving event occurs, it reduces the rate at which new bitcoin are created decreases. This results in a scarcity of new coins, which is key to Bitcoin’s deflationary design. If demand remains the same, bitcoin’s scarcity would lead to an increase in its price.
Bitcoin uses a consensus mechanism called Proof-of-Work (PoW) to validate transactions. Miners have to solve cryptographic puzzles, a process called mining. Miners receive newly minted bitcoin as a reward for the time-consuming and energy-intensive activity. After each halving, miners get fewer bitcoin per block, which could initially reduce their profits.
In theory, the reduced bitcoin supply coupled with continued demand could push the price of bitcoin up in the long term. However, this is not guaranteed since other factors, such as regulation and market sentiment, affect how the asset performs.
How Does the Bitcoin Halving Work?
The block reward halving mechanism is integrated into the software and operates automatically without reliance on any third party or central authority. When transactions occur on the Bitcoin network, they are organized into blocks, and miners are rewarded for successfully validating these transactions.
Every 210,000 blocks mined triggers an automatic reduction in the mining reward to half its previous value.
To date, there have been three halving events. The first one occurred in 2012, when the 210,000th block was mined, reducing block rewards from 50 BTC to 25 BTC. The second halving occurred in 2016, at the 420,000th block, resulting in a 12.5 BTC per block reward.
The third halving occurred in May 2020, further reducing mining rewards to 6.25 BTC per block. The fourth halving is scheduled for April 2024 and will reduce the reward to 3.125. These halving events are expected to continue until the final one, which is anticipated to occur in 2140, after which the reward system will transition to rely solely on transaction fees.
How Are Bitcoin Halving Events Determined?
The Bitcoin algorithm specifies that halvings occur after a specific number of newly created blocks. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, chose the distribution and halving mechanism.
While the block reward halving is predictable, the exact dates of future halving are uncertain.
Based on the predetermined logic of the Bitcoin algorithm, halvings occur approximately every 210,000 blocks or roughly every four years. The last halving occurred in May 2020 at block number 630,000, and the next halving is expected to occur in April 2024.
When Exactly Is the 2024 Bitcoin Halving?
The next halving will occur in April 2024, although the precise timing is unknown. Factors such as network conditions like mining power can influence the speed of block creation, causing a difference in the exact Bitcoin halving date.
The fourth Bitcoin halving is projected to be around the middle of this month.
As halvings happen after every 210,000 blocks, the 2024 halving will happen at the 840,000 block. During the event, the block reward for miners will be reduced by 50%, from 6.25 BTC to 3.125 BTC.
Past And Future Halving Events
Bitcoin had its first halving in 2012. Here is a list of the past and future halving events:
| Event | Date | Block number | Block Reward | Total new bitcoin between events |
| Bitcoin launch | January 3, 2009 | 0 | 50 BTC | 10,500,000 BTC |
| First halving | November 28, 2012 | 210,000 | 25 BTC | 5,250,000 BTC |
| Second halving | July 9, 2016 | 420,000 | 12.5 BTC | 2,625,000 BTC |
| Third halving | May 11, 2020 | 630,000 | 6.25 BTC | 1,312,500 BTC |
| Fourth halving | April 2024 | 740,000 | 3.125 BTC | 656,250 BTC |
| Fifth halving | Expected in 2028 | 850,000 | 1.5625 BTC | 328,125 BTC |
| Sixth halving | Expected in 2032 | 1,050,000 | 0.78125 BTC | 164,062.5 BTC |
| Seventh halving | Expected in 2036 | 1,260,000 | 0.390625 BTC | 82,031.25 BTC |
Notably, the list is not exhaustive since halvings are expected to occur until 2140, when all 21 million bitcoin have been mined.
How Have Halvings Affected the Price of Bitcoin?
Historically, halving events have often been associated with price increases. This is primarily due to the reduced rate of new Bitcoin creation, which creates scarcity and potentially drives up demand, consequently affecting the price.
In the past three halving events, a significant price surge typically begins around six to twelve months following the halving. However, this is usually followed by a correction after the peak.
The first halving saw the price of bitcoin go from around $13 to $1,100 in November 2013, but then a correction in April 2014 pushed the price down to $300. The same trend was seen in the next two Bitcoin halvings of 2016 and 2020.
Meanwhile, the Bitcoin price often experiences an upward trend leading up to a halving event. The surge comes as investors anticipate a post-halving price rally, typically leading them to HODL and buy more Bitcoin.
Nevertheless, whether a price increase will occur during the next halving remains uncertain since other factors, such as market sentiment and broader economic conditions, also contribute to the price of bitcoin.
Final Thoughts
Bitcoin’s limited supply promotes price stability and long-term value preservation. As the next halving nears, Bitcoin’s design principles continue to shape its trajectory as a decentralized and deflationary currency.
