When Is the Next Bitcoin Halving?
July 11 2022 - 4:52AM
Finscreener.org
Crypto is so thrilling that we discover new Bitcoin (BTC)
stories every day. Yet, there are a few major events that marked
Bitcoin’s history, apart from its miraculous birth in 2009. The
first was perhaps the infamous pizza
order, which gave Bitcoin a monetary value. Then followed
the fall of
Mt.Gox, the birth of Ethereum (ETH),
the Coinbase (NASDAQ: COIN)
exposure to the stock
market, and the series of halvings that came
in between.
While all other top moments were a direct result of multiple
external factors and market waves, halving lies
at the very core of Bitcoin’s ecosystem — the blockchain.
What Is Bitcoin Halving?
To explain Bitcoin halving, it might be better to start with
Bitcoin mining. Mining plays a central role in the Bitcoin
ecosystem, “killing two birds with one stone.” It generates new
Bitcoin units and verifies the transactions between the existing
ones. In other words, miners get newly-minted coins as a reward for
their effort in maintaining transparency on the blockchain. Given
Bitcoin’s popularity, we can expect that everyone could take an
“excavator” and drain the total supply of 21 million bitcoins in
the spur of the moment.
However, this technically-advanced system has a built-in
mechanism to prevent inflation. The demand for Bitcoin doesn’t
increase its production but raises the difficulty level of mining
instead. In addition, it reduces the reward amount after a certain
number of mined blocks to balance the supply. This gradual
reduction of the block reward is what we
call halving.
In the Bitcoin realm, this halving happens every 210,000 blocks,
or approximately every 4 years. This calculation is based on the
predictable behavior of Bitcoin — a single block can gather around
500 transactions while the blockchain has a limited capacity to
process no more than 6 blocks per hour.
History of Bitcoin Halving
When Satoshi NakamotoU+02019s idea got down to work at the end
of 2008, the block reward was 50 BTC. The first halving event
happened 4 years later, decreasing the reward amount to 25 BTC.
Accordingly, the second halving of 2016 split the reward down to
12.5 BTC, only to get 6.25 BTC after the last halving in May
2020.
With this halving rate, we can expect that miners will spend all
supply reserves by 2140. But, there is not much to be spent. Nearly
19 million units have been already produced, with a rough
projection that by 2030, nearly 99% of the
bitcoins will already be in use.
When Will the Next Bitcoin Halving Take
Place?
At this point, we are somewhere in the midway of the fourth
halving event to bring a new reward of 3.125 BTC per block and a
daily release rate of 450 bitcoins. Based on the above
parameters, this event is expected to take place on
May 4 2024, so “may the Bitcoin force be with you.”
Halving has always disrupted the crypto market, but fortunately,
with a bullish note.
Getting closer to the upper limit, you might think that the
shortage of mining material will make miners redundant. Not really,
miners will still be able to make a living from transaction fees
that Bitcoin users pay directly to the blockchain.
The Bottom Line — Will Bitcoin Halving Affect the Crypto
Industry?
The Bitcoin graph shows a repetitive
movement after each halving — a rise in the
Bitcoin’s price, which usually reaches its peak a year and a half
after the halving event. This is a standard supply-vs-demand rule —
the lower the production, the higher the asset scarcity.
Interestingly, expertsU+02019 opinions are sharply divided amid
the upcoming 2024 halving. While some are eagerly waiting for the
halving to shake the sleepy crypto market, others assert that based
on the latest events in the industry, this halving will be dull and
rather “non-eventful.” History doesnU+02019t always repeat itself
but we can be sure of one thing — Bitcoin halving encourages users
to save up their bitcoins rather than spend them, thereby
transforming Bitcoin into digital gold.
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