Bitcoin Halving: What It Is and Why It Matters for Crypto Investors

The Bitcoin community sees halvings as bullish events spotlighting the limited supply. Indeed, price data shows that historically, Bitcoin does increase in value after each halving, thereby helping miners recover lost earnings. However, just because something has happened in the past doesn’t mean it’s guaranteed to do so in the future. It might seem illogical for miners to continue working for half as much profit; however, new bitcoins are scarcer after each halving, which should increase the value of each coin.

Will Bitcoin halving decrease the price of Bitcoin?

The halving leverages the economic principles of supply and demand, assuming that over time, more people will become aware of Bitcoin, so demand will go up. At the same time, the slowing rate of supply will push prices up since there are fewer new BTC being minted to meet the demand. Historically, What is Bitcoin Halving after previous halving events, the price of Bitcoin has increased—but not immediately, and other factors have played a part. Since the halving reduces rewards, the incentive for miners to work on the Bitcoin network is also reduced, leading to fewer miners and less security for the network.

What Is the Current Bitcoin Block Reward?

The lowest intraday price that the crypto traded in the past year was $24,930.30 on Sep. 11, 2023. With these concepts, you can understand Bitcoin and start using digital currency. If you’d like to learn more about the benefits of our wallet app, check out our overview of Proton Wallet security(new window). The Bitcoin blockchain is a distributed database or ledger shared among a network of Bitcoin nodes (also known as full nodes, as they contain a full copy of the blockchain). These nodes are generally peer-to-peer, meaning any node can act as a server for the entire network, and they validate and propagate transactions. We’ll adjust this based on block times, but as of now here are the estimates for the 2028 through 2060 Bitcoin halvings.

The Second Halving

However, this time has been different, as the bitcoin price has already reached a new all-time in the months prior to the halving. He began his financial writing career in 2005 as a marketing copywriter, which is how he refined his investing knowledge and skills. Over the years, he’s written editorial and marketing pieces for many of the world’s leading financial newsletters and publications. His main investing interests are technology, blockchain and cryptocurrency.

When is the 2028 Bitcoin Halving?

That’s why the halving is watched closely by miners and investors alike. The Bitcoin halving can have a significant impact on the network hash rate. When the block reward is cut in half, mining Bitcoins becomes less profitable.

• While Bitcoin halving events may initially present challenges for miners, such as decreased revenue and heightened competition, they also catalyze adaptation and innovation within the mining sector.
• According to the laws of supply and demand, the dwindling Bitcoin supply should increase demand for Bitcoin, and would presumably push up prices.
• The original creators of Bitcoin wanted to ensure new blocks are added to the blockchain roughly every 10 minutes and prevent inflation due to increasing BTC supply.
• These innovations could potentially boost transaction throughput and transaction fees, providing a silver lining for miners.
• As central banks expand and contract the money supply at will, digital assets such as Bitcoin present a stark contrast.
• Bitcoin halving is integral to maintaining the digital currency’s scarcity and is designed to occur until the last bitcoin is mined.

Gains made regarding market value might offer inflation protection for investors, but they don’t for the cryptocurrency’s intended use as a payment method. Bitcoin traders and analysts have been closely watching the Bitcoin’s price performance following its most recent halving event. According to the trader, September will be crucial for the crypto king as it will determine whether BTC will witness bullish or bearish price action in the ensuing months.

What Happens to Miners When the Reward is Halved?

BTC is the incentive for carrying out these challenges, which require substantial computational power. Bitcoin halving is a predetermined event programmed into the Bitcoin protocol that occurs approximately every four years. It involves a reduction in the reward given to Bitcoin miners for validating transactions and adding them to the blockchain. Central banks play a crucial role in managing fiat currency supply, unlike cryptocurrencies like Bitcoin. During times of crisis, such as the COVID-19 pandemic, central banks have the power to initiate quantitative easing programs by flooding the economy with fresh cash.

• Diminishing rewards for miners could weaken the security of the Bitcoin network, potentially leading to large-scale double-spend attacks targeting exchanges, AVA Labs CEO Emin Gün Sirer told Crypto News.
• To put it another way, miners are earning fewer Bitcoins, but those Bitcoins are worth more than double what they were before the halving.
• Whereas after the halving, its value rose to about $18,000 and then hovered between $3,500 and $12,000 until the subsequent halving in 2020.
• The bitcoin algorithm dictates halving happens based on a certain creation of blocks.
• They also need to upgrade their mining capacity to maintain their position in the industry.
• The halving block was mined by ViaBTC, and it was the 840,000th block mined on the Bitcoin network.

They also need to upgrade their mining capacity to maintain their position in the industry. One of the key concepts behind halving the reward is to address inflation concerns. Inflation is a decrease in the amount of goods that a certain amount of currency can buy at any given moment.