Bitcoin Halving is an event that halves the reward for mining a block of Bitcoin. This event occurs every 210,000 blocks (approximately every four years) until the total supply of 21 million units is mined. Since the supply of Bitcoin is limited, the demand for Bitcoin increases after each halving. this article is an abstract of the source of Khabaronline, Rokna and nipotomag.
Bitcoin is one of the first recognized digital assets introduced to the world anonymously. In the past, each halving event has led to a partial increase in the price of Bitcoin. Even before halving, the price of Bitcoin has been rising. Therefore, if you’re looking to invest in Bitcoin, it’s ideal to do so before the next halving event.
What is Bitcoin Halving?
Bitcoin is a digital asset that is typically mined to increase supply and validate transactions. Bitcoin mining requires CPU and electricity. Therefore, a reward is determined for such mining to incentivize miners. Additionally, the reward should not be too high to avoid surplus supply and surpass the limit of 21 million Bitcoins.
However, as the creator did not intend for Bitcoin to be fully mined within a few years, over time Bitcoin mining became more difficult, and rewards were reduced by 50 percent.
Bitcoin Halving The first halving occurred in 2012, the second in 2016, and the third in 2020.
Halving Bitcoin rewards primarily encourage users to hold their coins. This technique helps control inflation and stabilize Bitcoin.
In general, the fewer coins remain, the higher the price rises.
How Does Bitcoin Halving Happen?
According to Bitcoin’s guidelines, after every 210,000 coins are released, the reward is reduced by 50 percent. Every transaction requires confirmation, which is done in groups called blocks. Each processed and produced block initially rewarded 50 Bitcoins to miners. However, after the first 210,000 blocks, it changed to 25 Bitcoins (in 2012) and reduced to 12.5 Bitcoins in 2020. A reward is determined for each block and confirmed transaction, changing at each halving. Bitcoin Halving’s Impact on Its Market Value The Bitcoin halving event is crucial because the decrease in Bitcoin’s price sends a clear signal. The maximum supply of these coins is 21 million, allowing the prediction of supply in circulation at different time intervals. For example, the supply of these coins in October 2021 was 18.85 million US dollars. The remaining 2.15 million US dollars were released as rewards to miners.
Bitcoin Halving’s Impact on Miners Bitcoin Halving affects miners. One of these impacts is the reduction in mining rewards. As a result, conditions become more difficult for small miners or those who do not have mining tools, as they must compete with more powerful miners. More powerful miners have stronger graphics cards for Bitcoin mining, better computer systems for mining, or a larger budget for cloud mining services.
Bitcoin Halving Program A look at the Bitcoin Halving event summarizes the reduction in Bitcoin supply for miners as follows:
History
By examining each Bitcoin Halving event, we learn how Bitcoin Halving has affected Bitcoin’s movement.
Year 2012 The first Bitcoin halving occurred on November 28th, with 10.5 million Bitcoins in circulation valued at $11 US dollars.
Year 2016 The second event occurred on July 9th. In this event, 5,250,000 Bitcoins were released, with a total of 420,000 blocks mined. Its price fluctuated between $500 and $1,000 US dollars, reaching $20,000 US dollars in December 2017.
Year 2020 The third event occurred on May 11th. In an upward trend, 2,625,000 Bitcoins were released. The price of Bitcoin at that time was $9,000 US dollars and rose to $30,000 US dollars by the end of the year.
What Happens After the Next Halving?
It is predicted that the next Bitcoin halving will occur in early 2024. 1,312,500 Bitcoins will be released. Miner rewards will decrease to 3.125 Bitcoins, so Bitcoin investors and traders should be cautious about the next halving event, as it could lead to instability and disruption in the crypto market.
Will Bitcoin End?
If rewards are halved every four years, it may no longer be profitable for miners to mine Bitcoin. Mining Bitcoin requires a specific amount of electricity and computer resources, and miners may feel that the rewards do not compensate for the costs. They may turn to mining or trading other digital assets.
Many large organizations may continue to mine Bitcoin, leading to less network centralization.
With Bitcoin’s supply ending in 2140, demand for Bitcoin may increase. At that time, the digital asset market may become more stable and valuable.
The first people who mined or purchased this coin received more profits than others. The blockchain itself is built this way. Multiple digital wallets can protect your Bitcoin.
Even if the number of miners decreases or Bitcoin runs out, Bitcoin will remain alive with various trading and transactions of digital assets.
Bitcoin Halving is the main reason for today’s Bitcoin price. If Bitcoin were not halved, its price would not have been much higher.
In the past, many users purchased it at a lower price and sold it after achieving good profits. These individuals have not profited from Bitcoin. They engage in short-term trading and profit from the rise and fall of various digital assets.
Now we can only wait and see what the next Bitcoin halving will do.