The Bitcoin halving is an event that occurs roughly every four years, when the reward for mining new blocks on the network is cut in half.
When the Bitcoin halving occurs, the mining reward for generating new blocks and confirming transactions on the blockchain network is halved, which has a major impact on the overall supply and demand of the cryptocurrency in the market.
In fact, many experts believe that the proximity of this event is causing the value of Bitcoin to rise, as it will reduce the rate of issuance of the cryptocurrency.
With the arrival of the next one halvingBitcoin miners, who are responsible for confirming transactions and generating new blocks in the chain using the Proof of Work (PoW) consensus algorithm, will receive less BTC for each new block generated than they currently receive.
The next halving event will reduce the block reward from 6,25 BTC to 3,125 BTC, on average, $212.500 dollars, according to the current price of the cryptocurrency, which just set a new all-time high (ATH).
How often does a Bitcoin halving occur?
Every 210.000 blocks, or roughly every four years, Bitcoin reduces its rewards for block miners.
As mentioned, the current network reward is 6,25 BTC, which was set with the arrival of the third halving that took place in 2020. However, starting in April of this year, that reward will be reduced to 3,125 BTC for each block mined on the blockchain network. This means that block miners will see their rewards reduced by 50%, immediately after the arrival of the halving.
According to estimates, The fourth halving of the Bitcoin network could occur on April 18This means that there are only 44 days left until this important event.
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In the whitepaper, the technical document that gave rise to Bitcoin, its creator Satoshi Nakamoto established that the rewards that block miners obtain for validating BTC transactions will be reduced by half every 210.000 blocks processed. This is a cyclical event that will occur in the blockchain network every time this exact number of blocks are mined in the chain, and until the cryptocurrency reaches its maximum emission to exist, of 21 million bitcoins.
From then on, network miners will no longer be able to receive rewards for mining new blocks generated on the network. However, they will be able to continue receiving the commissions obtained for validating the transactions that occur on the network. This is how experts believe the blockchain will remain operational, once all the bitcoins that will exist are mined.
What is the main objective of the halving?
Since Bitcoin's launch in 2009, there have been three halving events: the first in 2012, which reduced the network reward from 50 BTC to 25 BTC; the second in 2016, which reduced it from 25 BTC to 12,5 BTC; and the third in 2020, which reduced it from 12,5 BTC to 6,25 BTC.
These halvings are aimed at Adjust the pace of cryptocurrency issuance, so that the maximum number of bitcoins to exist, that is, their total supply, is reached around the year 2140.
The impact of the halving on the price of Bitcoin
Bitcoin is experiencing a new wave of growth driven by rising institutional demand and the approaching fourth halving. The main and most capitalized cryptocurrency in the market has established a new all-time high (ATH) of $68.803,07 on January 5.
The launch of the first Bitcoin spot ETFs in the United States marked an important milestone at the regulatory level, which has given greater credibility to the cryptocurrency as an investment asset. This opened the doors to greater adoption of BTC by traditional investors. In addition, blockchain developers have focused on expanding the technological features of the Bitcoin network, with the aim of making it available to a greater number of users, improving its scalability and security, and expanding use cases and applications.
On the other hand, as experts point out, historically, on the eve of a halving, the price of Bitcoin on the market usually takes on a bullish and speculative character. However, this is the first time that the cryptocurrency breaks a new ATH in the weeks leading up to this event.
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