What Is Bitcoin Halving? Bitcoin halving is an event where the reward for mining new Bitcoin blocks is cut in half, resulting in miners receiving 50% fewer Bitcoins for verifying transactions. Bitcoin halving occurs every 210,000 blocks which translate to approximately every 4 years. In other words, this is Bitcoin’s way of using a synthetic form of inflation that halves every four years until all Bitcoin is released and is in circulation. How Does Halving of Bitcoin Work? Halving, often referred to as “halvening,” is a pre-programmed event in the Bitcoin network that reduces the reward miners receive for confirming transactions and adding new blocks to the blockchain. Here’s how it works: Regular Mining Rewards: In the Bitcoin network, miners play a crucial role in securing the network and validating transactions. They are rewarded with newly created bitcoins and transaction fees for their efforts. Initially, when Bitcoin was created in 2009, miners received a reward of 50 bitcoins for each block they mined. Halving Schedule: Halving occurs approximately every four years or every 210,000 blocks. This event is hard-coded into the Bitcoin protocol. The purpose of halving is to control the rate at which new bitcoins are created and introduced into circulation, making it more predictable and gradually reducing the rate of inflation. Halving the Reward: When a halving event occurs, the mining reward is cut in half. For example, post first halving in the year 2012, the reward dropped from 50 bitcoins per block to 25 bitcoins a block. Subsequently, the second halving reduced the reward to 12.5 bitcoins, and so on. The most recent halving happened in May 2020, which reduced the reward for miners to 6.25 bitcoins. Impact on Supply: Halving has a big effect on the supply of fresh bitcoins coming into the market. It decreases the rate of inflation, which makes each new bitcoin scarcer and potentially more valuable over time. This is often cited as one of the reasons for Bitcoin’s price appreciation in the years following halving events. Miner Incentives: Halving affects miners’ incentives. As the block reward decreases, miners need to rely more on transaction fees to maintain their income. This can lead to increased competition among miners for including transactions in blocks, potentially resulting in higher fees for users. Predictability: Halving events are highly predictable and transparent. They are hard-coded into the protocol and occur at specific block heights. This predictability contrasts with traditional fiat currencies, where central banks can change monetary policy more unpredictably. Expected Next Bitcoin Halving Dates: 2024 and Beyond When is the Next Bitcoin Halving in 2024? Expected: May 01, 2024 Block number: 740,000 Block reward: 3.125 new BTC Total new Bitcoins: 656,250 BTC When is the Next Bitcoin Halving in 2028? Expected: 2028 Block number: 850,000 Block reward: 1.5625 new BTC Total new Bitcoins: 328,125 BTC
