A Bitcoin halving date is typically a quadrennial occurrence in which miners’ rewards for successfully validating and appending new blocks to the blockchain are significantly lowered. The event wherein the reward for mining Bitcoin is cut in half is referred to as the “Bitcoin halving.”
The halving event is significant because it will slow down the generation of new Bitcoins as the cryptocurrency gets closer to its fixed supply limit. Each block in the chain that was mined in 2009 paid out 50 BTC. Approximately 19.5 million bitcoins were in circulation as of October 2023, meaning that only roughly 1.5 million bitcoins remained to be distributed through mining awards.
What Is Bitcoin Halving?
Block payouts to Bitcoin miners for processing transactions are reduced once the network processes 210,000 blocks successfully, which happens around every four years. This event, which precisely halves the pace at which new Bitcoins enter circulation, is generally referred to as “bitcoin halving.”
This reward system will continue in earnest until around 2140, at which point the target of 21 million coins will be reached. After this, network users will pay transaction processing fees to miners as payment. Eventually, miners will be encouraged to participate and keep the network going by this price.
How Does Bitcoin Halving Work?
All bitcoin transactions are verified by a decentralized network of validators through a process known as mining. When they are the first to use intricate math to add a block of transactions to the bitcoin blockchain as part of its proof-of-work system, they are rewarded with 6.25 BTC.
6.25 BTC is now worth around $148,000, which provides miners with a respectable incentive to continue adding blocks of bitcoin transactions.
The bitcoin code mandates that once every 210,000 blocks are made, the reward for miners is cut in half. Those blocks of transactions are added around every 10 minutes. That occurs around every four years at times when there is often more volatility in the price of bitcoin.
When Was the First Bitcoin Halving?
November 2012 saw the first halving of the bitcoin currency. The most recent halving occurred in May 2020, while the subsequent one occurred in July 2016.
When bitcoin was first launched in 2009, the incentive for mining, or subsidy, was set at 50 BTC each block. Every time there is a fresh halving, the quantity decreases by half. For example, the reward for mining bitcoin decreased to 25 BTC each block following the first halving.
The last halving is scheduled for 2140. After that, there won’t be any more Bitcoin produced; there will be 21 million in circulation. Miners will then only get transaction fees from users who make transactions on the blockchain.
In order to make up for lost bitcoin revenue, miners may move their transaction processing power away from Bitcoin once the next halving takes place, according to Richard Baker, CEO of miner and blockchain services firm TAAL Distributed Information Technologies.
Experts think that a network with fewer miners would be less secure.
However, Patricia Trompeter, CEO of cryptocurrency miner Sphere 3D Corp., points out that although the halving decreases the payout for miners, it also reduces the supply of new currencies without lowering the demand.
“If the economic theory is correct—which it has been historically for bitcoin—then the supply shock should cause a sharp increase in bitcoin prices,” she states. “However, it is still up for debate whether the price movement that has historically occurred around each halving was a direct result of the halving.”
Miners would be encouraged to continue processing bitcoin transactions by higher prices.
Previous Events of Bitcoin Halving
Thus far, there have been three instances of Bitcoin halving. On November 28, 2012, there was the first halving event, when each block mined would provide a reward of 25 bitcoins. After that, on July 9, 2016, there was another halving event that reduced the award amount by half, to 12.5 bitcoins.
Last but not least, on May 11, 2020, there was a most recent halving event when the reward for each successfully mined block was lowered to 6.25 Bitcoins. The next halving is anticipated to occur in the middle of 2024, at which point the block reward will be 3.125 BTC.
Why There Is a Halving Every Four Years
The goal of the Bitcoin mining algorithm is to find new blocks about every ten minutes. The actual time needed to locate blocks, however, varies; it can take longer than ten minutes at times or less. This variation in block mining timeframes has the potential to reduce or increase the time needed to hit the subsequent halving milestone. If blocks were mined at a steady rate of 9.66 minutes per block, for example, it would take around 1,409 days to mine the 210,000 blocks required (assuming four years of 1,461 days, plus one day for a leap year).
What Is The Next Date Of The Bitcoin Halving?
It is projected that the upcoming Bitcoin halving will take place in April 2024, in tandem with the mining of the 740,000th block. The block reward will drop from 6.25 bitcoins to 3.125 bitcoins during this event. The network aims to generate one block every 10 minutes on average, but the exact date of the halving is yet unknown because of the unpredictable block creation time.
