Bitcoin Halving FAQ
What is BTC halving?
Bitcoin halving is an event where the number of generated BTC rewards per block is reduced by 50%, or cut in half. The next BTC halving event is expected to take place in April 2024. At that time, block rewards are scheduled to decrease from 6.25 BTC to 3.125 BTC. Here are some possible side effects of this event:
- For traders, this can lead to BTC price changes, which may result from a decrease in the supply of newly created coins.
- For miners, halving means a 50% lower block reward, which may affect the efficiency of mining operations.
How does Bitcoin block halving work?
Bitcoin halving is coded to occur once every 210,000 blocks, or roughly every four years, and will continue in this fashion until the final supply of 21 million BTC is reached. It is assumed that the last BTC will be mined in 2140. After that, transaction fees are supposed to be the only source of block rewards for miners.
Why is halving important?
It is essential for the Bitcoin network as it affects the rate at which new coins are released into circulation. With consecutive halvings, less BTC will be produced annually, potentially making it more difficult to obtain.
Halving ensures that new coins are generated at a steady pace, and offers a predictable algorithm of reward changes.
How many Bitcoin halvings have there been so far?
The previous Bitcoin halving dates were November 28, 2012, July 9, 2016, and May 11, 2020. This means there have been three halvings, at the moment of this writing.
In total, there will be 32 events of this kind. Once all of these happen, no more new BTC will be created, as the maximum supply will have been reached.
Will halving affect the BTC price?
It is difficult to predict the exact impact of the next halving on the Bitcoin market. Theoretically, it might lead to positive BTC price performance, because a decrease in the supply of newly created coins could increase the demand.
However, since conditions for Bitcoin halving to occur are predictable, miners and investors typically prepare for it in advance. This means halving may start affecting price movements long before, or after, the event date.
Here is how the BTC price performed after previous halvings:
- First halving (November 2012) — The BTC price was around $12. A year later, it reached $1,100, showing almost a 10,000% price surge since the halving date.
- Second halving (July 2016) — Bitcoin was trading near $670. In December 2017, the asset approached the $20,000 mark, experiencing nearly a 3,000% price increase since halving.
- Third halving (May 2020) — The BTC price was hovering at approximately $9,500. After that, it took the asset a year and a half to reach $69,000, jumping by 725%.
Keep in mind that there are various market drivers, which can move the BTC price in both directions. Therefore, halving shouldn’t be viewed as the only reason behind the above-mentioned price performances.