The bitcoin halving is a milestone every four years in the operation of the bitcoin system, in which, the new supply of bitcoins created in that interval is cut in half. To date, there have been three halvings, the first of which occurred in November 2012, and the most recent of which occurred in July 2020. (The next halving after that will occur in early 2024.)
Why Does Bitcoin Halving Happen?
The Bitcoin halving happens when the number of bitcoins awarded to miners for solving a block halves. This happens every 210,000 blocks or roughly every 4 years. The next halving is happening sometime in early 2024 – and on that unknown day, a miner’s reward will drop to 3.125 BTC. There is a lot of speculation around what will happen to the value of bitcoin when this happens, and I will explain why this happens and what will likely happen to the value of bitcoin after, both in the short and long term. The reason why Bitcoin halving happens is because of the way the Bitcoin protocol is designed. Bitcoin was designed to have a halving every 4 years. The idea behind this was that at some point in the future, the demand for bitcoins may outstrip the supply.
What Happens after Bitcoin Halving?
The halving is a hard-coded feature of the Bitcoin protocol that occurs when the number of Bitcoin rewarded for creating a block on the blockchain is cut in half – from 50 Bitcoin to 25 Bitcoin. This event most recently occurred in May 11, 2020, when the block reward was reduced from 12.5 Bitcoin to the current level of 6.5 Bitcoin. The last time the block reward halving occurred, the Bitcoin price increased by over 100%. (Bitcoin halvings are scheduled to occur once every 210,000 blocks, In 2009, the reward for each block in the chain mined was 50 Bitcoins. After the first halving it was 25, then 12.5, and it became 6.25 Bitcoins per block)
