This is almost half of the total value of all digital assets. For comparison, the next cryptocurrency by capitalization, Ethereum, is worth only $384.59 billion, demonstrating Bitcoin’s dominance in the industry.
What is halving
Halving is a mechanism for reducing the reward paid to miners for processing transactions in the Bitcoin network. This process plays a key role in the functioning of the blockchain, determining its predictability and stability.
Before the halving in 2024, miners received 6.25 BTC for each confirmed block. After the next reduction in the reward, it was reduced exactly by half – to 3.125 BTC.
Now let’s talk a little about the basics of the blockchain, so that, in case you are not very familiar with it, you can successfully get acquainted.
How does blockchain work?
Blockchain is a decentralized data storage system that is accessible to anyone. No one owns this system, and it ensures transparency of all transactions.
The blockchain contains information about every transaction and asset ownership. In essence, it is a virtual registry that is accessible to all network participants. Technically, the blockchain works as follows:
- Transaction data is grouped into blocks.
- The software of network participants checks and verifies these blocks.
- Verified blocks are added to the chain using a hash function – a unique digital summary of all transactions within the block.
Since the data in the blockchain is distributed across millions of computers around the world, it is almost impossible to forge or delete it. To enter false information, an attacker would have to hack all the devices in the network at the same time, which is an impossible task.
The Role of Miners in a Blockchain Network
Miners are like the accountants of the Bitcoin network. They process transactions, ensuring the reliability and security of the entire system. If miners stopped their activities, the network would not be able to function, and new transactions would be impossible.
It is the miners who maintain the decentralization and transparency of the network. It is impossible to forge data in the blockchain without changing all the blocks, which makes this technology so reliable.
When does halving happen?
Halving occurs approximately every four years, after 210 thousand blocks have been processed. Throughout the history of Bitcoin, the following have already taken place:
The first halving in 2012.
The second — in 2016.
The third — in 2020.
The fourth — in 2024.
However, the exact date of the halving is not known in advance. For example, at the beginning of 2024, it was assumed that the next reduction in the reward would take place on April 13. But due to a change in the speed of block mining, the halving took place only on April 20.
The speed of finding blocks is regulated by the complexity of the calculations, which is adjusted every 2016 blocks (approximately once every two weeks). If the number of miners increases, the complexity of the calculations increases so that the time to find one block remains unchanged — about 10 minutes. If the number of miners decreases, the complexity decreases to maintain a stable mining schedule.
In 2024, Bitcoin mining difficulty continues to increase as more participants join the network. This reflects the high level of interest in Bitcoin and strengthens its resilience.
Why is halving important?
Halving is a key element of the Bitcoin economic model. It was the brainchild of Satoshi Nakamoto, the mysterious creator of the first cryptocurrency. The Bitcoin algorithm was designed to keep the supply of coins limited and predictable.
Unlike national currencies, which central banks can print in unlimited quantities, the number of Bitcoins is strictly limited – only 21 million coins.
As of April 10, 2024, there are about 19.678 million BTC in circulation. This means that there are less than 1.4 million coins left to be mined, and this process is becoming more difficult every year.
Limited supply
At the beginning of the journey, in 2009, mining one bitcoin took only a few seconds and did not require significant costs. However, as the complexity of the network increased, the situation changed.
In 2021, mining one bitcoin required almost 9 years of equipment operation, and electricity costs alone amounted to about $12.5 thousand.
According to forecasts, the last bitcoin will be mined around 2140.
This approach makes bitcoin a unique asset protected from inflation, which is typical for traditional monetary systems.
Economic model and impact of halving
The reduction of the miner reward every four years has serious economic consequences:
- Limited supply: Bitcoin becomes an increasingly scarce asset, which contributes to its price growth.
- Incentives for miners: Even with the reduction in the reward, miners continue to work, as the price of Bitcoin increases, compensating for the reduction in the reward.
- Long-term stability: Halving maintains a balance between supply and demand, creating a sustainable economic model.
How Halving Affects Bitcoin Price
Bitcoin halving is historically perceived as an event that limits the supply of the cryptocurrency and creates the preconditions for its price growth. However, the rate of change after each halving varies significantly, which confirms the high volatility of the asset.
After the first halving in 2012, the value of Bitcoin increased 10 times within six months. However, after the second halving in 2016, the increase was only 16% over the same period. The third halving, which took place in 2020, led to a price increase of only 20% after six months.
At the moment, after the April halving of 2024, the price of Bitcoin remains at about $ 98,000 (as of mid-January 2025), but given the high volatility, the situation can change at any time.
Two scenarios after halving: growth or decline
Many analysts call the April halving one of the reasons for the possible growth of the Bitcoin price in 2024. It is expected that the reduction in emission will push the rate up due to the limited supply. However, there is an alternative point of view.
Experts from the American investment bank J.P. Morgan put forward a hypothesis that after the halving, the Bitcoin rate may fall to $42,000.
Conclusion
Halving is not just a technical process, but a key element that ensures the uniqueness and sustainability of Bitcoin. It guarantees a limited supply, stimulates long-term price growth, and maintains confidence in the first cryptocurrency.
This economic model allows Bitcoin to maintain its leadership in the cryptocurrency market and remain a key asset for millions of investors around the world. In the context of global instability, Bitcoin continues to be a reliable savings tool and an investment asset with huge potential for growth.
It will be extremely interesting for all market participants to watch the development of the situation in the context of increased Bitcoin volatility. Well, now we are expecting Bitcoin halving in 2028.
