Bitcoin halving is an event that occurs every 210,000 blocks (approximately every four years) when the block reward for mining Bitcoin is cut in half.
This process will continue until all 21 million Bitcoins have been mined, which is estimated to happen in the year 2140.
This blog post will explore the potential impact of the next Bitcoin halving event on the cryptocurrency market.
We will also discuss some of the factors that could influence whether or not the halving event triggers a new bull run?
Table of contents
- How Does Bitcoin Work?
- What is Bitcoin Mining?
- How does the Bitcoin Network Operates?
- What is the Bitcoin Halving (Halvening)?
- What is the Purpose of Bitcoin Halving?
- How Long Bitcoin Halving will continue?
- Why Bitcoin Halving Matters for Your Crypto Portfolio?
- The Acceleration Phase’: Analyst Predicts An 88% Increase For Bitcoin
- Here is a Table showing the Bitcoin Halving history.
- Which Bitcoin miners will survive?
- How Long Does Bitcoin Peak after Halving?
- Why are the Halvings Occurring Less than every 4 Years?
- What may happen when there are no Bitcoins Left?
- Why does Bitcoin Halving Occur?
- Binance CEO- All-time High’s likely to follow 2024 Bitcoin Halving.
How Does Bitcoin Work?
Chiefly, Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from you on the peer-to-peer bitcoin network without the need for intermediaries.
Additionally, Bitcoin transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain.
Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
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Here is how Bitcoin works:
a. Bitcoin is created through a process called mining
Miners use powerful computers to solve complex mathematical problems in order to verify transactions and add them to the blockchain. As a reward for their work, miners are given Bitcoin.
b. Bitcoin is stored in Digital wallets
Bitcoin wallets can be software-based, hardware-based, or paper-based. Software wallets are the most common type of Bitcoin wallet and it is installed on a computer or a mobil device.
Hardware wallets are more secure than software wallets, but they are also more expensive.
Paper wallets are the most common most secure type of Bitcoin wallet but they are also the most difficult to use.
c.Bitcoin is sent and received using Bitcoin adresses
Bitcoin addresses are long strings of letters and numbers that are unique to each Bitcoin wallet.
To send Bitcoin, you simply need to know the Bitcoin address of the recipient.
To receive Bitcoin, you simply need to provide your Bitcoin address to the sender.
d. Bitcoin transactions are verified by miners and recorded on the blockchain
Once a Bitcoin transaction is broadcast to the network, miners compete to verify it. The first miner to verify the transaction receives a reward in Bitcoin.
Once a transaction is verified, it is added to the blockchain, which is a public record of all Bitcoin transactions.
To summarize, Bitcoin transactions are verified by miners and recorded on a public ledger called Blockchain.
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What is Bitcoin Mining?
Basically, Bitcoin mining is the process by which people use computers or mining hardware to participate in Bitcoin’s blockchain network as a transaction processor and validator.
Bitcoin uses a system called Proof-of-Work (PoW). It is called proof-of-work because solving the encrypted hash takes time and energy, which acts as a proof that work was done.
The term mining is not used literally but as a reference to how precious metals are harvested.
When a block is filled with transactions, it is closed and sent to a mining queue. Once it is queued up for verification, Bitcoin miners compete to be the first to find a number with a value less than that of the hash.
The hash is a hexadecimal number that contains all of the encrypted information of the previous block.
Mining confirms the legitimacy of the transactions in a block and opens a new one. Nodes then verify the transactions further in a series of confirmations.
This process creates a chain of blocks of information, forming the blockchain.
How does the Bitcoin Network Operates?
Bitcoin’s underlying technology, blockchain, consists of a network of computers (called nodes) that run Bitcoin’s software and contain a partial or complete history of transactions occurring on its network.
Each full node that is node containing the entire history of transactions on Bitcoin is responsible for approving or rejecting a transaction in Bitcoin’s network.
To do that, the node conducts a series of checks to ensure the transaction is valid. These include ensuring that the transaction contains the correct validation parameters and does not exceed the required length.
Further, each transaction is approved individually. This is said to occur only after all the transactions contained in a block are approved.
After approval, the transaction is appended to the existing blockchain and broadcast to other nodes.
Furthermore, adding more computers (or nodes) to the blockchain increases its stability and security.
There were 17,195 nodes estimated to be running Bitcoin’s code as of May 31, 2023.
Although anyone can participate in Bitcoin’s network as a node, as long as they have enough storage to download the entire blockchain and its history of transactions, not all of them are miners.
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What is the Bitcoin Halving (Halvening)?
New bitcoins are issued by the Bitcoin network every 10 minutes.
For the first four years of Bitcoin’s existence, the amount of new bitcoins issued every 10 minutes was 50. Every four years, this number is cut in half. The day the amount halves is called a “halving“.
What is the Purpose of Bitcoin Halving?
The purpose of having is to control the inflation rate of Bitcoin. By reducing the number of new Bitcoins entering the market.
Additionally, halving helps to keep the supply of Bitcoin scarce and the price stable.
Further, these halving events are often seen as bullish for Bitcoin, as they lead to increased demand for the asset.
Primarily this is because miners need to sell some of their Bitcoins to cover their costs. And they are likely to do so at a higher price if they believe that the value of Bitcoin is going to increase in the future.
The next Bitcoin Halving is expected to occur in April 2024.
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How Long Bitcoin Halving will continue?
The system of Bitcoin halving will continue until about 2140, when the proposed limit of 21 million coins is reached.
At that point, miners will be rewarded with fees for processing transactions,which network users will pay.
These fees ensure miners are still incentivized to participate and keep the network going.
The halving event is significant because it marks another drop in the rate of new Bitcoin’s being produced as it approaches its finite supply.
In 2009, the reward for each block in the chain mined was 50 Bitcoins. As of April 2023, about 19.3 million Bitcoins were in circulation,leaving just around 1.68 million left to be released via mining rewards.
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Why Bitcoin Halving Matters for Your Crypto Portfolio?
The event, occurring approximately every four years, affects not only the market value of Bitcoin, but also the broader dynamics of the cryptocurrency space.
Why It Matters: The Bitcoin halving is a pre-coded event in the Bitcoin protocol that happens every 210,000 blocks — roughly every four years.
It reduces the reward miners receive for validating blockchain transactions, thus controlling the issuance of new Bitcoin and maintaining its scarcity.
Initially, in 2009, miners were rewarded with 50 BTC for each block.
The first halving in 2012 reduced this to 25 BTC, and subsequent halving in 2016 and 2020 further decreased it to 12.5 and 6.25 Bitcoin, respectively.
What Happens After
The halving constrains the rate at which new Bitcoin is created. This affects the balance between supply and demand. When the supply decreases while demand remains constant or increases, the value of Bitcoin is likely to rise.
The Bitcoin halving is also associated with increased market volatility. Investors and speculators closely watch the market dynamics around this event, leading to price fluctuations and heightened trading activity.
Implications For Miners: The reduced reward for mining new blocks directly impacts the profitability of Bitcoin mining, influencing the mining landscape.
Miners with higher energy costs and less efficient hardware may face challenges, leading to a shift in the market.
The halving stimulates discussions and innovation within the blockchain community, fostering technological advancements and community development.
The predictable scarcity introduced by the halving mechanism also positions Bitcoin as a hedge against inflation and economic instability, reinforcing its appeal as a long-term investment asset.
Predictions for Bitcoin’s price post-halving are varied. While some experts anticipate a significant price increase, others argue that halving’s effects may already be priced into Bitcoin’s value.
- BitQuant (via Nasdaq and VettaFi): Predicts a post-halving price of up to $250,000, more than nine times its current value.
- Coincodex: Forecasts Bitcoin to reach approximately $49,300 by April 2024, with a potential rally to around $84,100 after the halving.
- Bloomberg: Suggests Bitcoin could surpass $50,000 by 2024, attributing this to the upcoming halving and an expected increase of at least 81% in its value.
- Cryptonews: Anticipates Bitcoin exceeding $100,000, and possibly $300,000 by 2028, with a post-halving range of $60,000 to $90,000.
- Standard Chartered: Predicts Bitcoin’s value could reach $100,000 by the end of 2024, driven by its characteristics as a decentralized, scarce digital asset.
While predictions vary, the Bitcoin halving event will serve as a catalyst for significant changes and opportunities within the crypto ecosystem.
The Acceleration Phase’: Analyst Predicts An 88% Increase For Bitcoin
- Cory Mitchell predicts a ‘Bitcoin acceleration phase’ similar to past surges in 2013, 2017 and 2020.
- Expect a surge in Bitcoin’s value due to excitement over spot exchange-traded funds (ETFs).
In the dynamic world of cryptocurrencies, Bitcoin BTC/USD is anticipated to make a significant comeback, potentially reaching its all-time high of over $69,000 by mid 2024, according to an analyst.
This projection reflects an 88% increase from its current valuation of around $36,500.
“Bitcoin uptrends tend to move quickly once they get going, moving hundreds of percent often in less than a year,” Cory Mitchell, an analyst with Trading.biz, said.
Mitchell’s analysis points to a significant resurgence in Bitcoin’s value, following a pattern observed in previous years. He noted:
- 2013: Bitcoin rallied 1200% in approximately 100 days
- 2017: It rallied 1,900% in just under a year
- 2020: it rallied 400% in about 140 days.
However, he cautioned about potential market fluctuations, including pullbacks and price dumps, en route to reclaiming its peak.
Despite the challenges faced in the past year, including several high-profile bankruptcies within the industry and an overall bearish economic climate, Bitcoin has managed an impressive gain of almost 116%.
This growth has been partly fueled by the filing of spot Bitcoin exchange-traded fund (ETF) applications in the U.S., heightening the anticipation of regulated offerings and potentially unlocking institutional demand.
The increase in regulated instrument usage has mirrored Bitcoin’s price growth.
For instance, Bitcoin futures trading on the Chicago Mercantile Exchange (CME) recently recorded the world’s highest volumes, surpassing those of Binance, the industry leader.
The open interest on the CME stood at approximately $4.07 billion, marking a 4% increase over 24 hours and accounting for a 24.7% market share.
In contrast, Binance’s open interest was reported at $3.8 billion, a decrease of 7.8% in the same timeframe.
These trading patterns are seen by market observers as indicative of growing institutional interest in Bitcoin products, pointing to a broader acceptance and integration of cryptocurrencies into the mainstream financial landscape.
Here is a Table showing the Bitcoin Halving history.
|Halving Date||Block height||Block reward|
|November 28,2012||210,000||50 BTC to 25 BTC|
|July 9,2016||420,000||25 BTC to 12.5 BTC|
|May 11, 2020||630,000||12.5 BTC to 6.25 BTC|
|April 2024(estimated)||840,000||6.25 BTC to 3.125 BTC|
Which Bitcoin miners will survive?
Only the miners with the lowest energy costs and most efficient equipment will survive the once-every-four-years event.
The Bitcoin mining hash rate, a measure of computing power on the network, will likely decline dramatically a year from now,once the rewards are halved.
How Long Does Bitcoin Peak after Halving?
The halving took place on May 11, slashing the block reward from 12.5 to 6.25 at the number 630,000 block.
Bitcoin was trading around $8,787/BTC at the time. 18 months from then Bitcoin hit a peak of around $66,000.
As of 202, network participants who validate transactions are awarded 6.25 bitcoins (BTC) for each block successfully mined.
The next having is expected to occur in April or May 2024, when the block will fall to 3.125.
Over time, the impact of each halving will diminish as the block reward approaches zero.
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Why are the Halvings Occurring Less than every 4 Years?
Chiefly, the Bitcoin mining algorithm is set with a target of finding new blocks once every 10 minutes.
Some blocks take more than 10 minutes, some take less. This can decrease or increase the amount of time it takes to reach the next halving goal.
For example, if blocks consecutively average 9.66 minutes to mine , it would take about 1,409 days to mine the 210,000 blocks required (four years is 1461 days, including one day for a leap year).
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What may happen when there are no Bitcoins Left?
It is often thought that in 2140, the last Bitcoin will be mined. However, if the reward is halved every 210,000 blocks, there will always be a mining reward assuming the blockchain still exists at that time.
The reward will just get smaller and smaller every time there is a halving means if this practice continues.
Why does Bitcoin Halving Occur?
Essentially, Bitcoin halving occurs as a part of the protocol’s design and is akey mechanism to control the supply of a new Bitcoin entering circulation.
The primary reasons for Bitcoins’ halving are as follows.
1.Scarcity and controlled Supply
Satoshi Nakamoto, the person or group of people who invented Bitcoin, wanted to create a digital currency with a constrained and managed supply.
Reducing the mining rewards by half decreases the rate at which new Bitcoin is generated. Due to its rising scarcity over time, Bitcoin has a valuable value proposition as a deflationary asset.
The Bitcoin halving contributes to limiting excessive inflation in the Bitcoin ecosystem.
The rate at which new Bitcoin reaches the market is decreased by lowering the block reward. This restricted issuance process aims to keep the coin stable and valuable in the long run.
4.Market forces and Economies
The halving event has economic repercussions for both Bitcoin miners and the broader market.
Miners must modify their operations to be profitable with a lower block reward. Which increases competition and drives away less productive miners.
This, in turn, can impact the overall security and decentralization of the network.
In the past, Bitcoin price rises have frequently been linked to halving events. Positive market sentiment and probable price appreciation have resulted from the expectation of decreased supply and rising demand.
However, it is crucial to remember the past performance does not guarantee future results and that factors other than halving events affect Bitcoin’s prices.
Binance CEO- All-time High’s likely to follow 2024 Bitcoin Halving.
The CEO of the World’s largest crypto exchange explains how Bitcoin’s programmed supply shock has historically had a significant impact on its price.
Changpeng Zhao, the CEO of Binance and Crypto exchanges, has expressed his belief that the next Bitcoin halving, scheduled for 2024, could usher in a period of renewed price growth.
Additionally, Bitcoin halvings, which occur approximately every four years, are pivotal events in the crypto’s history.
During these events, the rate at which new Bitcoin is created through mining is reduced, resulting in a reduction in the asset’s issuance.
As alluded by Zhao, this supply shock has historically had a significant impact on the price of Bitcoin, resulting in all-time highs in 2013, 2017, and 2021.
Zhao offers the following explanation for the data.
In the lead-up to a Bitcoin halving, the crypto community typically witnesses a surge in excitement, discussions, and media coverage. This phenomenon reflects the anticipation and high expectations surrounding the event.
b.Post -Halving Reality
Contrary to some expectations, the price of Bitcoin does not immediately double overnight following a halving.
Instead, the immediate aftermath is often characterized by a period of consolidation and adjustments.
c. Subsequent Price Surges
It is in the years to or years following a Bitcoin halving that the crypto’s price has historically surged to new all-time highs.
This phenomenon is driven by a combination of factors, including increased awareness, growing adoption, and the reduced rate of Bitcoin production.
As such, the remarks find Zhao echoing the belief of many Bitcoiners that the asset is becoming predictable and cyclical with its price movements.
As a result from that fact that it is a sound money whose monetary policy is not controlled by governments.
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Bitcoin halving cuts the rate at which new bitcoins are released into circulation in half. The purpose of halving is to control the inflation rate of Bitcoin.
Subsequently, Bitcoin halving has major implications for its network. For miners, the halving event may result in consolidation in their ranks.
Especially, as individual miners and small outfits drop out of the mining ecosystem or are taken over by larger players.
These events serve as a reminder of the digital currency’s deflationary characteristics, setting it apart from traditional fiat currencies.
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April 25, 2024. It is expected to reduce the block reward to 3.125 BTC. This data is based on current estimates.
Halving takes place every 4 years. The halving policy was written into Bitcoin’s mining algorithm to counteract inflation by maintaining scarcity. In theory, the reduction in the price of Bitcoin issuance means that the price will increase if demand remains the same.
The battered crypto market awaits the Bitcoin (BTC) blockchain’s fourth mining reward halving, which is due in April 2024. In hopes it would kickstart a major run higher, living up to its past reputation as a major bullish catalyst.
Bitcoin has a maximum supply of 21 million coins, and as of March 2023, more than 19 are mined. There are approximately 2 million Bitcoins left to be mined. Knowing this matters because it affects Bitcoin’s value and future price.
Many experts believe that it is always better to invest 6 to 7 months before the halving. The BTC price is set to trigger a massive upswing soon after the event, which may even find a new ATH in the coming days.