Bitcoin, the ultimate buzzword of the decade, is one of the most successful and popular cryptocurrencies that shook the financial landscape like no other. Along with being a great investment, Bitcoin became in demand also as a payment method because of the technology used in it. But unlike other currencies, Bitcoin is governed by a set of tight guidelines, one of which is Bitcoin halving.
Bitcoin halving is one of the most anticipated events in the financial and crypto sector. Even the long-term price development of Bitcoin is contingent on Bitcoin halving.
What is Bitcoin halving?
The Bitcoin halving is a pre-programmed event where the reward for mining a Bitcoin is reduced and cut to half. This event takes place every 210,000 blocks or approximately every four years. The total supply of Bitcoin is fixed and immutable. As there will only ever be 21 million Bitcoins and approximately 19.5 million Bitcoins have already been mined, only an approximate 1.5 million more Bitcoins can be created. The halving policy was incorporated in Bitcoin to control the limited supply and avoid inflation all the while keeping its market value intact.
Bitcoin halving history:
The first Bitcoin halving happened in 2012. At the circulation of 210,000th block, the mining reward dropped down to 25 BTC as opposed to the original 50 BTC. Similarly, the second halving took place in July 2016 when the reward halved from 25 BTC to 12.5 BTC at the 420,000th block. The third halving occurred at the 630,000th block was mined in May 2020, where the reward was reduced to 6.25 BTC, half of 12.5. The next halving is likely to happen around April 2024 at the 840,000th block.
Every halving event had an immense impact on mining profitability and the price of Bitcoin. For example, the price of one Bitcoin (BTC) rocketed up from $12 to $1,032 (more than 8,500%) after the first halving. 526 days after the second halving, the value of one Bitcoin hit an all-time high of $20,089 and The price of Bitcoin was approximately $8,787/BTC right before the third halving, which shot up to $66,000 in the time span of 18 months after it.
When is the next halving?
The next halving is likely to happen around April 2024 at the mining of the 840,000th block. It is believed that the last halving is scheduled for 2140. By that time there will be 21 million Bitcoins in use at that time, and no more will be produced. Miners will then only receive transaction fees as payment.