Bitcoin (BTC) is the main driver of the cryptocurrency market, followed by other top-100 coins by market cap. Bitcoin halving is one of the fundamental factors affecting the coin’s value. The nearest BTC halving is planned for the spring of 2024. Today, you will learn what Bitcoin halving is and how it affects the BTC’s rate. Let’s get started!
What Is Bitcoin Halving?
Halving is the process of reducing the speed of generating new units of cryptocurrency using a Proof-of-Work (PoW) consensus algorithm, which occurs at a fixed frequency and is inherent in the blockchain’s essence. From the miner’s perspective, halving is a process of reducing of the reward for mining each block. In particular, Bitcoin halving takes place automatically after every 210,000 blocks mined, which happens on average once every 4 years.
It is believed that the creator of Bitcoin, Satoshi Nakamoto, laid a limited emission and halving to maintain interest in Bitcoin — if it becomes more difficult to mine BTC after each halving, then its value grows. The controversy of this idea is confirmed by the fact that coins based on a Proof-of-Stake (PoS) consensus algorithm and other algorithms are issued in full amount when a network is launched. And this, in turn, does not affect the coin’s value.
One of the advantages of halving is that the decrease in mining profitability filters out outdated, inefficient mining farms, pushing miners to use more powerful and efficient equipment.
Next Bitcoin Halving
The next bitcoin halving will occur approximately in April-May 2024 (the exact date is unknown). After it is carried out, the speed of generating coins will decrease — that is, the supply speed will decrease, and the mining reward will be cut in half or halved. A total of 32 Bitcoin halvings are planned, after which all 21 million coins will be mined.
All Bitcoin Halving Dates
As of early 2023, there have been 3 halvings since the launch of the Bitcoin mainnet. Below is a table with the dates of their holding and the amount of reward for each block mined.
| Halving | Date | Mining Difficulty | Block Number | Block Reward (BTC) | Price During Halving (USD) |
| BTC Launch | 01/03/2009 | 1 | 0 | 50 | – |
| 1 | 11/28/2012 | 3,438,909 | 210,000 | 25 | 12 |
| 2 | 07/09/2016 | 213,398,925,331 | 420,000 | 12.5 | 651 |
| 3 | 05/11/2020 | 16,104,807,485,529 | 630,000 | 6.25 | 8,601 |
| 4 | May 2024 | – | 840,000 | 3.125 | – |
| 5 | May 2028 | – | 950,000 | 1.5625 | – |
According to the schedule of Bitcoin halving dates, the last halving of the reward will be held in 2136, with all BTCs mined in 2140.
Can a Halving Date Change?
The halving date depends on when the next 210,000 blocks are mined, i.e., on a block pace. The block pace is the rate at which PoW miners discover new blocks through a hashing puzzle. The amount of time it takes PoW miners to find a block adjusts automatically over time by the difficulty level. Therefore, the halving schedule is relatively predictable, but shifts of several weeks are possible.
How Does Halving Affect BTC Price?
After the first Bitcoin halving in November 2012, the price increased more than 200 times in 6 months. The next halving had less impact on the price. After miners’ reward was reduced in 2016, the BTC price almost doubled over the next 6 months. After the third halving from May to November 2020, the price increased by 1.56 times.
The following reasons explain the impact of previous halvings on the BTC rate:
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- The essential role of miners in the market supply. In 2012 and 2016, the rate of BTC was significantly lower than in subsequent years. The cryptocurrency market was a dark horse; therefore, a relatively small number of players were observed in the crypto market. Accordingly, the mining difficulty was relatively low, as was the cost of equipment. Therefore, mining that did not require vast knowledge or analysis skills was a more attractive option for earning money than active trading.
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- Growing interest in cryptocurrencies due to a chain reaction. Halving made supply decrease while the price of BTC increased — new investors entered the market, seeing opportunities to profit from price increases. The influx of new investors provoked the next pricing phase, making mining even more profitable.
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- Relatively low price of graphics cards for mining. It is another factor that has kept the cost of mining low in recent years, making it attractive to new market participants.
Why is the influence of halving decreasing? The ongoing halving cut in half the reward and thus indirectly affected the decrease in coins’ supply. But, if in 2012 the reward was reduced by 25 BTC, then in 2020 — only by 6.25 BTC. Also, with each new halving and price growth on the market, the number of active traders and investors increased — the share of miners gradually decreased. This explains the main reason why the role of halving in the formation of BTC rates is gradually decreasing.
Will Bitcoin Price Rise After the Halving in 2024?
In 2024, the next halving is expected, as a result of which the reward for 1 block will decrease from the existing 6.25 BTC to 3.125 BTC. This means that the mining reward with the same equipment power used will be cut in half. This, in turn, will increase the payback period of mining farms, which has already become longer due to the fall in BTC rates.
Far-sighted miners foresaw this moment by purchasing equipment so that it would completely exhaust its resource by the time of halving. After the next halving, they will buy equipment with more power and continue mining. Still, most miners will switch to other coins or completely abandon mining.
In theory, this could lead to the following:
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- A decrease in the number of miners means a decrease in mining new coins and their market supply.
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- Reducing supply while maintaining the same level of demand will automatically push the price up.
Analysts at Arcane Research believe that the role of miners in total sales has declined sharply after the 2020 halving, and they no longer have such a significant impact on the BTC price. According to them, the average daily volume of mined coins is 900 BTC; this figure was 1,800 BTC before halving. This means that the reduction in supply volumes can be easily compensated either by a decrease in demand amid market stagnation or by cryptocurrency whales capable of putting a large amount of BTC onto the market to manipulate the price.
In other words, the volume of coins mined is not enough to significantly shift the price. Therefore, with a high probability, the upcoming halving will not affect the price significantly.
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Conclusion
BTC halving is a 2-fold decrease in mining rewards embedded in the blockchain, occurring after every 210,000 blocks are mined. For miners, this means that their income for the same period drops by 2 times after each halving, and the payback increases accordingly.
Analysts note a decrease in the role of miners in BTC pricing. At the time of halving in 2024, the rate may slightly increase for a short period of time. Still, the price will be influenced by other, more significant fundamental factors.
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