If you”re a casual follower of the crypto space, you have probably heard crypto enthusiasts raving about the bitcoin halving coming up.
However, you might know why they are excited and what it means for the pioneer cryptocurrency.
The halving is like an automated monetary policy on the Bitcoin network, and in this article, we’ll answer eight of the most pressing questions you might have about the halving. Hopefully, they tell you everything you need to know about the bitcoin halving.
What is bitcoin halving?
The bitcoin halving is a programmed event that reduces the amount of bitcoin miners earn by half. This means the rate at which new bitcoins enter the market slows down.
For example, if miners earn $10 for mining bitcoin, they will get $5 after the halving.
If you don’t already know, bitcoin miners are responsible for creating new bitcoin. They use very powerful computers to solve complex mathematical problems.
These problems are part of the process of validating and securing transactions on the Bitcoin network. Miners compete to solve these problems, and the first one to solve them gets to add a new block of transactions to the blockchain. Bitcoins are the reward for doing this why it is called bitcoin mining.
Because of the massive amount of computational power needed to solve these maths problems, miners often join mining pools to increase their chances of successfully mining a block and earning rewards.
1. When does bitcoin halving happen?
The bitcoin halving event happens every four years. The first one was on November 28, 2012, and it took the amount of bitcoin miners earn from 50 bitcoins to 25. The last one was on May 11, 2020, which cut down miner earnings to 6.25 bitcoins.
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This means that the next one will cut earnings to 3.125 bitcoins.
2. When is the next halving?
The next halving is said to occur in April 2024, but the exact date isn’t known yet. A Coinbase blog post, for example, said the halving will happen on April 16 2024, while another article by Van Eck said April 19.
Although the date is not set, many believe it’ll happen on April 19 or 20.
3. Why is the bitcoin halving necessary?
The bitcoin halving is necessary because it controls the supply of bitcoin. The pioneer currency is designed to have a fixed supply cap of 21 million coins.
Having a fixed amount of bitcoins in circulation and controlling the rate at which they are created helps bitcoins become scarce, making them more valuable. This is why bitcoin is referred to as a deflationary token.
4. How many bitcoins are in circulation now?
According to Investopedia, there were 19.65 million bitcoins in circulation as of March 2024. This means there are about 1.35 million bitcoins left to be mined.
5. Will the halving cause bitcoin price to increase?
Historically, halving events have caused the price of bitcoin to increase. After the first halving, the price of bitcoin went from $12 to $1,075 within a year. Following the second halving, bitcoin also went from $650 to $2,560 at about the same time.
However, Vishal Sacheendran, Head of Regional Markets at Binance said that “whether there is further room for price growth depends on the overall market sentiment, adoption rates, and other factors at play during the time of the halving event.
“This year’s halving is unique in that it comes amid a series of other significant events in the Bitcoin and wider crypto ecosystem.”
6. How will the halving affect mining activity?
According to Sacheendran, slashing mining rewards by half could lead to some miners exiting the market, and fewer miners means fewer transaction validators, which could lead to slower transaction time.
However, “we might also see some of the bigger miners find opportunities to acquire smaller competitors or see more mergers in the space.”
7. Is the halving event a good time to buy bitcoin?
While the halving event might lead to an increase in the bitcoin price, it is still important for investors to do thorough research before investing. It is also important to consider the state of the global economy and ongoing conflicts before making investment decisions.
8. What happens when all the bitcoin has been mined?
The last halving will happen in the year 2136 and miner reward will go down to 0.00000001 bitcoin. By 2140, miners will not earn any bitcoin from mining, and their only reward will come from transaction fees.
However, there are questions about the possibility of transaction fees encouraging mining and bitcoin security. We’ll just have to wait for 2140.
