Since the launch of Bitcoin in 2009, important events have occurred called Bitcoin halvings. The block reward has been reduced each year by half in three different halvings. In 2024 will be the next bitcoin halving, meaning that we are halfway there. We take a closer look at the impact of this fourth halving on the supply and value of bitcoin.
A Fourth Halving Is Coming Up
Based on the current bitcoin mined rate, the bitcoin halves are scheduled for every 210,000 block. The current total of 19 million bitcoins has been mined. This leaves just 2 million BTC left to mine. The halving of block rewards by half (currently sitting at 6.25 BTC/block), helps to predict supply dynamics for the digital asset.
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Each halving brings down the supply and issuance of daily BTC. The next halving will see the supply and issuance drop further. Each block reward is only 3.125 BTC. With an average of 144 blocks per day being mined, daily BTC awards to miners could fall to 900 to just 450. It helps ensure that bitcoin supply decreases over time. This is one of the key features of the network’s monetary policy.
What It Does to Bitcoin
There are many effects that the bitcoin halving can have on cryptocurrency. Mining difficulty is one of these. Mining difficulty skyrockets because miners are not getting as much BTC for every block. This trend is apparent in the trends that have followed the recent bitcoin halving, which occurred in 2020. Likewise, bitcoin’s hashrate also increases as miners require more computing power to be able to mine blocks.
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Low fees are one of the most notable aspects about the current status of the network. Even though bitcoin has already seen a halving in its value, transaction fees remain at an all-time low. It is thought that this can be attributed to better use of block space, as no evidence has been provided that the economy of the network is declining.
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One thing remains constant across every bitcoin halving, and it is its effect on the price. The lowest price for the digital asset was recorded halfway through the halving process. It is expected that the price will drop by this time. A halving which reduces BTC’s supply has been an indicator of a bull rally in the past and it is likely that 2024 will be no exception.
Featured Image from 99Bitcoins. Chart from TradingView.com