Bitcoin halving is a very popular term among crypto traders. But
- What does it really stand for,
- Can it affect the Bitcoin price and
- How can you take advantage of the next one?
In this article, we will explain to you exactly what this Bitcoin halving is and why it is so important to you as a Bitcoin enthusiast. Understanding Bitcoin halving might sound like a complicated task, but it’s easier than you think.
Let’s dive in!
What Is Bitcoin Halving?
Bitcoin halving occurs once every four years. This is when the future supply of Bitcoin gets cut in half.
With this feature, the total supply of new Bitcoin into the crypto market will continue to fall. As the years go by, this will protect Bitcoin from inflation while ensuring Bitcoin value and price continue going up.
To better understand Bitcoin halving, how new Bitcoins are created and added to the crypto market, we will be explaining the term “Bitcoin Mining” and how it works.
Bitcoin Mining & The Mining Reward
Bitcoin mining refers to the process of digitally adding transaction records to the blockchain.
By mining, you can earn cryptocurrency without having to put down money for it. So, when someone uses their computing power to validate transactions, they get rewarded with newly minted Bitcoins.
This is done because the Bitcoin network is decentralized, so there is no central bank or authority to validate transactions.
The Bitcoin network is self-sustaining by using newly minted coins as an incentive for people who offer their computational power.
Every time a miner solves a mathematical problem on a block in the Bitcoin blockchain, he is rewarded with Bitcoin. This is called the “block reward”. A new block is added to the blockchain approximately every 10 minutes.
How Does Bitcoin Halving Affect Miners?
When Bitcoin Halving occurs, the total amount of new Bitcoin awarded to a miner for validating a transaction on the Bitcoin network gets slashed in half.
This means new Bitcoin created from block validation drops drastically reducing supply while demand for the cryptocurrency continues to rise.
Total Supply Of Bitcoins To Be Mined
The creator of Bitcoin, Satoshi Nakamoto, decided that the limit of total Bitcoins should be 21 million. No one knows why he chose this number, and the number itself does not matter. What matters is that there can never be more than 21 million Bitcoins in circulation.
However, all of these Bitcoins are not mined yet. In fact, it will take more than a hundred years before all Bitcoins have been mined. People estimate that the last Bitcoin will be mined in the year 2144.
Satoshi Nakamoto decided that the newly created supply of Bitcoins would be distributed through mining until the 21 million coin limit is met. These Bitcoins will be distributed through a strict set of rules. The rule says that the block reward will be cut in half every four years until every Bitcoin is mined. In other words, the Bitcoin inflation will be halved every four years.
The block reward is currently at 6.25 BTC per valid block mined. But this reward changes roughly every four years, or after every 210,000 blocks are mined
This means that approximately 900 Bitcoins are generated every day. After the next halving, this will be cut in half to 450 Bitcoins per day.
Below is an image showing us the inflation of Bitcoin in orange, and the supply of Bitcoin in blue over the next 50 years. As you can see, the orange line has clear steps down every four years at every halving. And as the inflation gets lower you can see the blue line level out.
Two Bitcoin Halving Countdowns
There are two count downs for the Bitcoin halving. And on this page, you’ll see the two separate Bitcoin halving countdowns. This is to give you access to both ways of estimating the Bitcoin halving date.
The Purple Bitcoin Halving Countdown
The purple countdown is based on on-chain data directly from the Bitcoin blockchain. This means that the estimated time of arrival (ETA) of the halving may vary.
Why? Well, the block time is NOT always 10 minutes. The 10-minute block time is just the average. So, if the block time decreases to 9 minutes then the ETA will be sooner than expected, and vice versa.
However, thanks to the Bitcoin difficulty adjustment, the block time usually stays close to 10 minutes.
The purple on-chain Bitcoin halving countdown on this page is based on data that comes directly from the Bitcoin blockchain, via blockchain.com.
The Turquoise Bitcoin Halving Countdown
The turquoise Bitcoin halving countdown is based on the average block time of 10-minutes. This countdown gives us a good estimate of the approximate arrival of the halving.
The average block time is used by most people to estimate the halving. However, we decided to put both countdowns on this page. This way you have all the information on one page instead of switching back and forth between websites.
The Mechanics Of The Halving
Sometimes you might find that the purple countdown moves a little slower or a little faster than normal. This is because, a new block is added approximately every 10 minutes, but the block time changes from day-to-day. When the block time changes, then so does the countdowns’ ETA.
On this page, you can see the current block time, and it is that number that is used to estimate the Bitcoin halving date for the turquoise countdown.
When the Bitcoin hash rate increases dramatically. This leads to a lag in the automatic difficulty adjustment. The effect is that the halving could happen sooner than previously expected and vice versa.
The halving happens approximately every 4 years. However, a more specific measurement is that the halving takes place every 210,000 blocks.
This is why we created this on-chain Bitcoin halving countdown. The timer updates the target date in real-time whenever the blockchain data demands it. This will help you to estimate the Bitcoin halving date better.
Bitcoin Halving Dates
When the Bitcoin network was first launched January 1st 2009, the Bitcoin block reward was 50 Bitcoins per block.
Almost four years later on November the 28th 2012, Bitcoin had its first halving and the block reward was cut in half, to 25 Bitcoins.
Another four years later on July the 9th 2016 the second Bitcoin halving took place and the block reward was again cut in half to 12.5 Bitcoins per block.
The third Bitcoin halving took place on May 11th, 2020 cutting the block reward to 6.25 Bitcoins per block.
In another 4 years in 2024, there will be a fourth Bitcoin halving date cutting the reward down to 3.125 Bitcoins per block. As stated above, this schedule of halvings will continue until the Bitcoin inflation is 0%.
Bitcoin Zero Inflation
Actually, the fact that the Bitcoin inflation will reach 0% makes Bitcoin the most scarce asset on the planet. There is nothing else in the world that will have such an absolute limited supply.
You can take advantage of this opportunity by trading Bitcoin with leverage on Bybit. The platform is fantastic for both beginners and experienced traders.
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If you would prefer to buy and hold or invest long term in Bitcoin (which is advisable for all newbies taking baby steps into the crypto market), you can read our How To Buy Bitcoin Guide for a detailed explanation of all the steps to take as well as the best Bitcoin platforms and crypto wallets to use.
Bitcoin Halving 2024
The Bitcoin halving of 2020 will take place in May and pushes the block reward down from 6.25 Bitcoins to 3.125 Bitcoins per block. The current annual Bitcoin inflation is at 3.68% but after 2024 halving the inflation will be cut in half to approximately 1.80%.
This means that the Bitcoin inflation will be lower than the official inflation target of 2% set by central banks. The inflation rate of gold is at 1.6%, and gold has a market cap of approximately $9 trillion dollars.
Bitcoin Halving History
On the 3rd of January 2009, the bitcoin network came into existence with Satoshi Nakamoto mining the genesis block of bitcoin (block number 0), which had a reward of 50 bitcoins. In these 13 years of Bitcoin history, we’ve only seen 3 Bitcoin halvings so far.
No one knows why Satoshi Nakamoto chose the 21 million Bitcoins limit or why the inflation is cut in half every four years. Logically, it could as well have been 134 million in total Bitcoins and a halving every 10 years. Nevertheless, the Bitcoin inflation keeps getting cut in half every four years and this will continue approximately until the year 2144.
Bitcoin Halving Chart
Everyone who is into Bitcoin trading is trying to use historical halvings to predict the future. Historical price action can never guarantee future price action. However, sometimes we can find significant patterns that can at least help us see some possible trends. Looking in the Bitcoin halving chart we can see a clear trend of the Bitcoin price going up massively after every Bitcoin halvings.
The vertical red lines in this image below represent the Bitcoin halvings. In the image, you can see how the Bitcoin price has had an amazing bull run following the three previous Bitcoin halvings.
And while this is not set in stone, we can clearly see that there is a very high probability for the Bitcoin price to surge to new highs after every halving due to a massive cut in supply.
This historical data can help us best prepare and take advantage of the coming bull run in the next Bitcoin halving. The next bitcoin halving is expected around 2024 and will cut the block reward to 3.125 BTC.
How To Take Advantage Of The Halving?
There are multiple ways to take advantage of the coming Bitcoin halving but the best strategy to use is the buy and hold strategy. With this strategy, you buy and store Bitcoin in your wallet address in anticipation of a coming price surge after the halving process is completed.
Crypto traders who took advantage of this halving in the past by accumulating Bitcoin have all seen more than 500% return on their investment after every halving. However past gains do not guarantee future returns, we strongly advise that you only invest what you are willing to lose.
How To Buy Bitcoin Before The Halving
To buy Bitcoin from a Bitcoin exchange might sound easy, but there are many alternatives out there. For example, one of the most popular Bitcoin exchanges right now is Coinbase, but there are exchanges with lower fees, offering better services than Coinbase.
On this list, SwissBorg tops the chart, offering one of the best crypto platforms to buy Bitcoin, Ethereum, and other cryptocurrencies easily and at the best. You can also monitor your crypto portfolio and optimize your investment for better returns straight from the app.
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If you want to compare the different exchanges against each other, you can check out our full list of Bitcoin exchanges. In our list, we’ve compiled the most popular exchanges and compared the different fees that they take.
For a more detailed analysis of each of the exchanges on our list, check out our full guide on How to Buy Bitcoin.
Does Bitcoin Halving Affect The General Crypto Market?
Bitcoin currently holds around 60% of the total market dominace in the cryptocurrency industry. So when Bitcoin moves, you can be rest assured that the crypto Market will follow.
However, during Bitcoin bull runs, Altcoins tend to underperform the giant because investors are moving money out of Altcoins and into Bitcoin in order to catch that massive price surge that usually occurs after every halving.
Altcoins tend to perform better when Bitcoin is ranging or consolidating at an area of major support or resistance.
Bitcoin Halving Or Halvening?
On social media, you’ll see people using both of these spellings referring to the same thing. There is not a right or wrong way of saying it, but the more grammatically correct way seems to be Bitcoin “halving”, not Bitcoin halvening.
Bringing It All Together
With this knowledge in hand, you are better equipped and ready to take the next step. If you position your crypto portfolio well, there is a very high probability that you will take full advantage of the next halving and make huge returns from it.
To gain more information on how to partake in this coming Bitcoin Bull run and trade this cryptocurrency, you can read my How To Trade Bitcoin Guide. You can also check my top list of Best Bitcoin Exchanges To Trade With.