Bitcoin undergoes a ” halving ” process every four years, which involves reducing the amount of Bitcoin created every 10 minutes by half. The upcoming halving, which will be Bitcoin’s third, is scheduled to occur in May 2020. As a result, the current block reward of 12.5 Bitcoin every 10 minutes will be reduced to 6.25 Bitcoin.
Since the maximum supply cap for Bitcoin is 21 million, halving the block reward means it will take longer for all Bitcoin to enter circulation. But this also means that less and less new Bitcoin will be created over time, and due to its limited supply — Bitcoin will continue to become increasingly scarce. And scarcity enhances value.
Historically, the Bitcoin Halving has proven to be an essential catalyst that propels Bitcoin into a new Bull Market.
Bitcoin Halving Dates
- Nov. 28, 2012, to 25 BTC
- July 9, 2016, to 12.5 BTC
- May 11, 2020, to 6.25 BTC
- April or May of 2024 – 3.125 BTC
Things You Need To Know Before The Next Bitcoin Halving
1. Understanding Bitcoin Halving: Bitcoin halving is an event that occurs approximately every four years when the block reward for mining new Bitcoin blocks is reduced by half. This reduction is programmed into the Bitcoin protocol and is designed to control the supply of new Bitcoins entering circulation.
2. Impact on Supply and Inflation: Bitcoin halving significantly impacts the supply of new Bitcoins. The reduced block reward means fewer new Bitcoins are created, leading to a decrease in the inflation rate. This reduction in supply, coupled with increasing demand, has historically resulted in price increases for Bitcoin.
3. Mining Rewards and Difficulty: Bitcoin halving affects miners who secure the network and validate transactions. As the block reward decreases, miners receive fewer Bitcoins as a reward for their mining efforts. This reduction in rewards can impact the profitability of mining operations. Additionally, the Bitcoin network adjusts the mining difficulty level to ensure that new blocks are added approximately every 10 minutes.
4. Price Volatility: Bitcoin halving events often generate increased speculation and anticipation within the cryptocurrency community. This heightened interest can lead to increased price volatility. In previous halvings, Bitcoin experienced both significant price surges and temporary price corrections following the event.
5. Long-Term Investment Perspective: While short-term price movements can be unpredictable around a halving event, many Bitcoin proponents view it as a positive factor for long-term investment. The reduction in the rate of new supply entering the market, combined with increasing demand and growing adoption, has historically contributed to long-term price appreciation for Bitcoin.
It’s important to note that the above points are based on historical observations and trends, and the future outcome of a Bitcoin halving event cannot be guaranteed.
Also read: Bitcoin Halving: Understanding The Significance Of This Key Event In Cryptocurrency
