Everything to Know about Bitcoin Halving

Author: Rea Setia
Overview

When the Bitcoin halving event takes place, the reward for mining the Bitcoin is divided in half. This halving event cuts the Bitcoins inflation rate and also the rate of new Bitcoins that enter into circulation. The previous halvings of Bitcoin are correlated with extreme boom and bust trends that have increased the Bitcoin prices before the event. The last halving of Bitcoin was on 11th May 2020, which resulted in the block reward of 6.25 BTC. There is no coincidence that the Bitcoin halving third event took place when some of the popular cryptocurrencies started to climb to new heights.

Bitcoin Halving
  • When 210,000 blocks are mined every 4 years, the reward of the Bitcoin miners for processing the transactions is divided into half. Eventually, the cut in the rate affects the new Bitcoins that are released in circulation. This is one of the ways adopted by Bitcoin as a form of using synthetic inflation that halves every 4 years up until all the Bitcoins are out in circulation.
  • The trend will continue till the year 2140 and until this point, the Bitcoin miners are rewarded with the processing fees for the transaction, where the users in the Bitcoin network will pay. This ensures that miners are offered incentives to mine the Bitcoin and help the network run smoothly.
  • a href="https://wazirx.com/blog/what-is-bitcoin-halving/">Bitcoin halving
is important because it marks an important point in reducing bitcoin's finite supply. The maximum supply is 21 million Bitcoins; as of 2021 August, there are 18 million Bitcoins already in circulation leaving 3 million that are to be released through mining rewards.

What is Bitcoin Mining?
  • Bitcoins and other cryptocurrencies created through the mining process use significant computational power for authenticating the transactions that have already taken place on the Bitcoin blockchain.
  • When the authentication is done, the transactions are added to the blocks in the blockchain and the Bitcoin miner is rewarded with a specific number of Bitcoin, and then it is added to the supply of Bitcoin that is already in circulation.
  • The miner gets their reward for mining Bitcoins and upon successful authentication the miner receives them. For every four years, the block reward is halved. When Bitcoin was launched the miner might have earned 50 BTC for successfully processing the block.
  • After the first halving, the reward was reduced to 25 BTC and subsequently, it came to 12.5, and presently it is 6.25 bitcoins when the halving had taken place in 2020.
What will happen when Bitcoin Halves?
  • The term Bitcoin halving is related to how many new bitcoins are found in newly added blocks. In the initial stage, the miners got a reward of 50 Bitcoins and this reward was reduced to 50% every 4 years. As of today, there have been three halving events and now the reward is 6.25 BTC. When the next halving takes place, the block will have 3.125 BTC.
  • Scarcity is one of the major factors that makes halving Bitcoin prices go up. There are only 21 million Bitcoins to be mined and the majority of them are already completed; the remaining coins are to be mined before the year 2140.
  • People can buy bitcoin in India through bitcoin exchanges in India when they predict the price of the bitcoin will go up. Currently, the
bitcoin price in India is 46,98,938.84 Indian rupee, and before purchasing Bitcoin, they need to convert to BTC price INR and proceed.

Final ThoughtsLast May, the recent halving of Bitcoin price was $8787 and in the most recent halving, within a month its price skyrocketed. Over the past few months, Bitcoin price has gone to all-time highs and it currently is at $58000 which set a record high on 25 February when it increased to $58000 level. Having said this, the number of miners for Bitcoin is expected to drop as the reward for mining goes down and few miners might end up in loss.