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Bitcoin is all set to undergo another halving event in April 2024. This widely anticipated event will significantly impact different metrics of Bitcoin and play a major role within the fundamentals of this blockchain. In this article, we take a deep dive into the Bitcoin halving event, look at past halvings, and discuss its impact.
What Is Bitcoin Halving?
Before we understand what the halving event is, let us look at the fundamentals of Bitcoin to understand why it needs one. Bitcoin's total supply is capped at 21 million coins, ensuring scarcity. The halving mechanism controls the release rate of new Bitcoins. Every four years, the block reward, which is the incentive for miners to verify transactions, is cut in half. This slows down the rate at which new Bitcoins enter circulation, creating a gradual decrease in new supply.
Bitcoin generates new coins through the process of mining. Miners verify transactions and build the blockchain. In response to their honest work, miners are rewarded with a block containing Bitcoins. These rewards are known as mining rewards.
Bitcoin halving slashes the mining rewards in half to reduce the rate at which new Bitcoin (BTC) enters circulation. These events are programmed to occur every 210,000 blocks. This ensures that the issuance of new Bitcoins is constrained, thereby successfully ensuring the BTC’s scarcity.
History of Bitcoin Halvings
When Bitcoin launched in 2009, miners earned 50 BTC as block rewards for mining. In 2012, Bitcoin experienced its first halving, cutting the mining reward by 50% to 25 BTC per block. After another 210,000 blocks, in 2016, a second halving further reduced the reward to 12.5 BTC. By the 2020 halving event, miners began receiving 6.25 BTC per block.
Bitcoin Halving Countdown
The reward, which was reduced from 50 BTC to 6.25 BTC, will be further reduced to half, bringing it to 3.125 BTC in April 2024. This is set to occur at block number 840,000 and will leave approximately 1,312,500 BTC to be mined.
What Will Happen When Bitcoin Halves in 2024?
One of the most notable events in the crypto industry, the crypto community eagerly anticipates the next halving in 2024. Historically, halving events are known to set the stage for a bull run and the start of another four-year cycle.
The historic price movements from halving days to cycle peak include:
2012 – 2016: $12.3 to $1,170 = + 9,449.59%
2016 – 2020: $535 to $19,400 = + 3,532.71%
2020 – 2024: $8,590 to $67,450 = + 684.33%
Conclusion
Halvings represent a fundamental ethos of Bitcoin. It is a testament to the scarce nature of BTC, decreasing the rate at which new coins are released into the market. This ultimately creates scarcity and may lead to the price appreciation of BTC. The halving of 2024 will be interesting as it will be the first time post the launch of Bitcoin ETFs.
Disclaimer:
It is highly recommended to conduct thorough research prior to making any financial decisions. Please note that this article's purpose is solely for educational purposes and the author and the organization, M2, do not influence the reader's investment or trading choices.
With over 7 years of experience working for more than 200 web3 projects, Pooja is a content strategist and growth specialist for blockchain and Web3 companies. Her work has been published across leading publications which have garnered over 1 Million views. Her extensive experience in this field enables her to simplify complex blockchain concepts, making them easily understandable for diverse audiences.
