Halving is one of the most crucial events on the Bitcoin blockchain and occurs approximately every four years. 

This creates scarcity and makes Bitcoin anti-inflationary.

Since 2020, Bitcoin miners have earned 6.25 bitcoins for each mined block.

The next halving will occur in April 2024, when the block reward will be slashed to 3.125. The final halving is predicted to happen in 2140.

What is Bitcoin halving?

Bitcoin halving is an event that occurs on the Bitcoin network when mining rewards and inflation rates are reduced to 50% or cut in half. The reduction occurs approximately every four years after Bitcoin miners completely mine 210,000 blocks.

The halving cycle is a predetermined process built into the Bitcoin protocol to control and balance the issuance of new Bitcoins into circulation to keep Bitcoin inflation-proof.

When Bitcoin launched in 2009, miners earned 50 BTC for each block they mined, which attracted investors and miners to mine Bitcoin and build interest in it in its early development stage.

The first Bitcoin halving occurred in 2012 when the reward for Bitcoin mining was reduced from 50 BTC to 25 BTC. 

The importance of Bitcoin halving

 

The halving is Satoshi Nakamoto‘s genius way of sustaining the long-term need for Bitcoin to be anti-inflationary. To maintain a strong and growing price value for Bitcoin, there has to be a way to create scarcity in the market, which is what the halving does.

Halving the mining reward also has a significant impact on the security of the network. As the reward decreases, miners find it more difficult to mine Bitcoin profitably. 

Only the most efficient miners with the most powerful hardware and the lowest electricity costs will continue to mine Bitcoin, ensuring the network remains secure.

Consequently, this could decrease the network’s overall hash rate, which measures the amount of mining power miners contribute to the network. 

Although the mining difficulties will discourage many miners, price increase will motivate miners to invest more in mining. 

The Bitcoin network also has a mechanism that adjusts the mining difficulty to ensure that new blocks are added to the blockchain continuously, regardless of changes in the hash rate.

When is the next Bitcoin Halving?

The next Bitcoin Halving is expected to occur in April 2024. One popular misconception beginners and some older crypto users have about the halving is that it has a specific date. It is important to know that this is not true.

The halving only occurs once 210,000 blocks have been mined. It is impossible to put an exact date on this as the mining process is decentralized, and people cannot be configured to mine blocks in a specific order enough to put an exact date to the halving day, but with mining statistics, it’s easier to predict the annual and monthly window the Bitcoin halving event will occur. 

What to expect in the next Bitcoin halving

The next Bitcoin halving will follow the same process as the previous halving. The block mining reward will be halved from 6.25 to 3.125 Bitcoins to create an inflationary balance once the number of mined blocks totals 840,000 since the first halving in 2012.

Bitcoin has already witnessed a strong price pullback to its closest most substantial support level, and the price is gradually picking up. 

The gradual price increase to the halving period shows that crypto investors are preparing for the next halving. The goal is to get in early before the halving causes a scarcity of Bitcoin and potentially increases Bitcoin’s price, which usually happens based on Bitcoin’s halving history.

As we continue to see more potential use cases of Bitcoin, the next halving might be different and influential than the last halving. The scarcity drove prices up in the previous halving. Still, other important factors that will push Bitcoin’s price in the next halving include publicity and the growing user population due to more people discovering the higher benefits of crypto than fiat. 

Many analysts believe Bitcoin will make new highs by early 2025, almost a year after the next halving. Judging by Bitcoin’s price history, it is likely to happen this way.

Any price increase, however, will be determined by how demand for Bitcoin grows over the length of the halving.

Bitcoin halving History

The 2012 Bitcoin Halving 

The first Bitcoin halving happened on November 28, 2012. Initially, the halving had no noticeable effect on the price of Bitcoin. However, in the first few months of 2013, Bitcoin experienced an increase in value and grew steadily. It gave way to a correction in April and continued in Q4 2013, ending above $1000. 

This was followed by a prolonged price fall, which hit a bottom of $152 on 14 January 2015. Finally, in October 2015, 9 months before the next halving, Bitcoin began to experience steady growth again.

The 2016 Bitcoin Halving

The second halving happened on 9th July 2016. It was a highly anticipated event by the crypto communities. The expectations and widespread interest in accepting Bitcoin led to a significant price increase that began at the end of May, a month and a half before the halving. However, a price correction occurred in mid-June, and soon after the halving, the price fell again.

Fortunately, it was only a mere short-term correction. The bullish trend soon continued and grew exponentially. Bitcoin peaked on 17th December 2017, when the price reached its all-time high of $19,700. After that, Bitcoin experienced a long price decline.

However, there were several reasons for the price increase. In 2017, Bitcoin and other cryptos gained massive popularity, attracting many new participants and investors to the crypto market. This led to the emergence of the ‘Initial Coin Offering‘ era, which further increased demand for Bitcoin since many ICOs accepted it.

The 2020 Bitcoin Halving

The third halving, which happened on 11th May 2020, just like the previous Bitcoin halving, did not cause an immediate price increase. Growth began on earlier halving dates at the start of the year, but the coronavirus pandemic in March caused Bitcoin’s price to plummet. This makes it even more challenging to say how much halving affected the price. The price increase didn’t occur until February 2021. 

At the same time, the amount of Bitcoin being mined is relatively small compared to the total amount of Bitcoin in the market, and it is unlikely that a small decline in supply can cause a significant price increase. 

Thus, a further increase in the price of Bitcoin will be much more influenced by a growth in demand than a reduction in supply.