The issuance rate is halved every four years, and the event is known as a "halving" or "halvening." In the 2012 halving, the issuance of new bitcoins (BTC) every 10 minutes decreased by half, going from 50 bitcoins to 25. Similarly, in 2016, it further reduced from 25 BTC to 12.5 BTC. During the latest halving on May 11, 2020, the reward per block decreased from 12.5 to 6.25 BTC. Looking ahead to the 2024 halving, the reward will be halved again, dropping from 6.25 BTC per block to 3.125 BTC.
Mining Reward
The Bitcoin Block Halving holds great importance as it reduces the number of new bitcoins produced per block as a mining reward. Consequently, the supply of new bitcoins diminishes, resulting in increased buying costs. Typically, in regular markets, a decrease in supply coupled with consistent demand leads to higher prices. As the halving curtails the supply of new bitcoins while demand remains steady, it has historically preceded significant surges in Bitcoin's value. The occurrence of Bitcoin halving is determined by the number of blocks, not a specific date. The anticipated 2024 halving is expected to take place in April 2024, with a slight possibility of occurring in either March or May.
What happens to Bitcoin mining?
Many always speculate that miners will shut down after the halving due to a lack of rewards. The reality is most mining pools are very smart and price in the halving, so they don't end up shutting down because of mining rewards. Bitcoin's halving is an essential mechanism for controlling its supply. As the block subsidy expires, miners will receive transaction fees for securing the network. At present, each block generates 6.25 new bitcoins.
What happened in previous Bitcoin halvings?
The inaugural Bitcoin halving event occurred on November 28th, 2012, marking the 2012 block halving. SlushPool successfully mined the halving block using a Radeon HD 5800 miner. Prior to the halving, the reward per block stood at 50 BTC, which was subsequently reduced to 25 BTC. On the day of the halving, the price of Bitcoin was $12.35, while 150 days later, it soared to $127.00.
2016 Bitcoin Halving
In July 2016, Bitcoin underwent its most recent halving event, which took place on July 9th. Prior to the halving, Bitcoin's value had fallen from a high of over $750 to around $673. In the lead up to the event, Bitcoin's value fluctuated between $600 and $700, with a peak price of $666 on the day of the halving. Bitcoin remained stagnant throughout the month and subsequently underwent a significant decline, plummeting to a low of $533 by August 3. However, it began to recuperate shortly after.
Over the course of 2017, Bitcoin experienced a remarkable recovery, culminating in its all-time high value of $20,089 on December 17th of that year. This ascent was a significant one, with the cryptocurrency gradually climbing from $1,000 in January, to $2,000 in May, $4,000 in August, and $8,000 in November. In total, it took 17 months for Bitcoin to climb from $666 to its peak value, representing an impressive gain of 2,916% since the second halving. If Bitcoin were to undergo comparable price movement over the next 17 months, it would entail a substantial surge from its current value of $9,050 to a staggering $273,000, providing a broader context for understanding the potential growth.
2020 Bitcoin Halving
The third halving took place on May 11, 2020, resulting in a reduction of the new BTC per block from 12.5 BTC to 6.25 BTC. On the day of the halving, the price was recorded at $8821.42, which increased to $10,943.00 after 150 days. Since that Halving event, it's worth noting that investor sentiment regarding the upcoming record monetary expansion has been proven right. The Federal Reserve, along with other major global central banks, has been injecting liquidity into the financial system to maintain loose borrowing conditions.
This has played a significant role in the adoption of bitcoin as an alternative monetary asset that exists independently from the traditional system. As of now, bitcoin has experienced a remarkable 533% increase since the halving event. The surge in demand, combined with a reduced supply issuance of 50%, has caused the asset's price to skyrocket, surpassing a market cap of $1 trillion.