The 2024 Bitcoin Halving is complete.
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Bitcoin Halving explained
The Bitcoin Whitepaper says the block reward should be permanently cut in half every 210,000 blocks, or roughly every 4 years to reduce the number of new coins entering the Bitcoin network.
What is the Bitcoin halving?
A Bitcoin halving is when block rewards for miners on the Bitcoin blockchain are cut in half to reduce the number of new coins entering the network. The initial Bitcoin block reward was 50 BTC. Currently, the block reward is 6.25 BTC and after the next halving the block reward will be 3.125 BTC.
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Why was the Bitcoin halving done?
A Bitcoin halving helps to manage Bitcoin’s inflation rate by controlling supply, which is fixed at 21 million bitcoins. This mechanism curbs the flow of new coins coming into circulation, ensuring scarcity and avoiding devaluation.
Why is the Bitcoin halving important for investors?
The next Bitcoin halving is one of the most anticipated events in the crypto calendar. It could potentially have a huge impact on Bitcoin’s price and the overall market landscape, even during the countdown period. Here’s why:
Scarcity:
The finite supply of Bitcoin makes it an attractive proposition to potential investors. As the halving event enhances scarcity, Bitcoin’s investment appeal likely increases as well.
Market psychology:
Leading up to the halving, scarcity and event anticipation could lead to a strong positive market sentiment and price movements.
Miner impact:
As the block rewards become less significant, some miners stop operations as it is no longer profitable due to rising costs. The potential hashrate decline could influence Bitcoin’s price.
What other factors influence Bitcoin price? What other factors influence Bitcoin price?
The Bitcoin halving countdown has kicked into high gear. With the biggest crypto event of 2024 on the horizon, we have some exciting giveaways lined up for you, so watch this space!
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Bitcoin halving history
In the past, Bitcoin halvings have spurred notable BTC price surges and broader crypto growth, encouraging increased investment across the market.
Be aware that past performance is no indication of future results. As of: April 2024. Source: Bitcoin price
The first Bitcoin halving:
November 28, 2012
The block reward was reduced from 50 BTC to 25 BTC.
- Bitcoin price grew from around $11 pre-halving to over $1,110 by December 2013 - a staggering 100x increase!
- Bitcoin's highest closing price in 2012 was $13.50
- If you bought $1,000 of BTC in November 2012, it would have been worth $232,051 by November 2013
- The 2012 halving sparked Bitcoin's rise to the top, validating the cryptocurrency concept and stimulating wider adoption
The second Bitcoin halving:
July 9, 2016
The block reward was reduced from 25 BTC to 12.5 BTC.
- Bitcoin price jumped from roughly $650 pre-halving to around $19,500 by December 2017 - a 30x increase in 6 months
- Bitcoin’s highest closing price in 2016 was $975.74
- If you bought $1,000 of BTC in July 2016, it would have been worth $3,012 by January 2017 and $28,996 by December 2017
- Ethereum's price rose around 1600% over the next year from about $11 in May 2016 to around $203 in July 2017
The third Bitcoin halving:
May 11, 2020
The block reward was reduced from 12.5 BTC to 6.25 BTC.
- Bitcoin price rose from roughly $8,900 before the halving to over $64,000 by April 2021, an 8x price surge in under a year
- Bitcoin’s highest closing price in 2021 was $28,994.35
- If you bought $1,000 of BTC in May 2020, it would have been worth $6,608 by May 2021 and $7,842 by November 2021
- Cardano surged over 300% within 6 months post-halving from around $0.04 in May 2020 to $0.16 in November 2020
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FAQ
- How often does a Bitcoin halving occur?
Every 4 years (approximately) or every 210,000 blocks.
- Why does a Bitcoin halving happen?
A Bitcoin halving is when the block rewards of the network are cut in half to reduce the number of new coins entering the Bitcoin network.
- Why is it hard to confirm the exact Bitcoin halving date?
The halving is set to occur after 210,000 blocks are mined, but the timing varies. Each block typically takes 10 minutes to mine, but as the hashrate (computing power) fluctuates depending on the number of miners on the network, the exact halving date is difficult to predict.
- What happens to the price of Bitcoin after a halving?
Looking at the historical data, there’s good reason to believe that the next Bitcoin halving could result in a BTC price surge and potentially a bull run. For example, in the last halving, the Bitcoin price grew from roughly $8,900 in May 2020 pre-halving to over $64,000 by May 2021. However, it’s also important to remember that past performance is not an indicator of future value and you should properly consider current market conditions before investing.
- How is Bitcoin created and what is Bitcoin mining?
The creation of new Bitcoin is authenticated through a process called mining, which relies on software applications that run on specially designed hardware. Miners worldwide connect their devices to form a peer-to-peer network. Together, they maintain the Bitcoin ledger by verifying and approving legitimate transactions.
- How long does it take to mine 1 Bitcoin (BTC)?
With the right (and most expensive) hardware, it can about 10 minutes to mine 1 Bitcoin. However, for most users, it typically takes around 30 days.
- Why is it difficult to get Bitcoin (BTC) price predictions?
There are multiple factors that influence Bitcoin’s price including; supply, demand, market sentiment, competing cryptocurrencies, macroeconomics, regulation, legislation, and the halving itself. Therefore it is hard to make an accurate price prediction as there are so many variables to consider.
- How can I safely buy and store Bitcoin?
Buy Bitcoin from a reputable andsecure cryptocurrency platform. You can protect yourself from bad actors by storing your assets offline in ‘cold storage’. These offline wallets can provide a high level of security for cryptocurrency as crypto keys are kept offline, meaning hackers and bad actors cannot get access to these funds without physical access to the device. Find out more about different methods ofcrypto storage.
- What are the risks associated with Bitcoin investment?
Bitcoin does offer notable upside potential compared to traditional asset classes, but it is vital to understand that Bitcoin investment does come with risk as its price is volatile. Like many other assets, Bitcoin’s prices fluctuate based on the impact of various factors such as global financial events, wars, government regulation and even popular culture. Furthermore, news events, security breaches, and uncertainty in the intrinsic worth of Bitcoin as a store of value can also inflate risk. Overall, you should diligently weigh up all the risks before approaching any investment.
- How does a Bitcoin halving affect other cryptocurrencies?
Previous Bitcoin halvings have hugely impacted the wider cryptocurrency market. The publicity and scarcity around halving events have encouraged increased participation and investment as other major cryptocurrencies have seen significant market cap growth during these periods. This spillover effect demonstrates the considerable impact that Bitcoin has on the wider crypto economy.
- What happens when all Bitcoins are mined?
The total Bitcoin supply is fixed at 21 million bitcoins and once they are all mined, the miners will no longer receive bitcoins as rewards for solving complex transactions. However, they will be compensated via transaction fees.
- What is "mining difficulty"?
Mining difficulty measures how difficult it is to solve the complex cryptographic puzzles used in the mining process of Bitcoin and other cryptocurrencies that use a Proof-of-Work system.
Learn more about Bitcoin
Want to find out a “bit” more about Bitcoin? Check out these helpful articles in the Bitpanda Academy to learn the basics.
What is Bitcoin?
Bitcoin (BTC) is the world’s first cryptocurrency that paved the way for all other cryptocurrencies to follow. Created in 2008 by Satoshi Nakamoto, Bitcoin is currently the best-known and most popular cryptocurrency in circulation.
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What determines the Bitcoin price?
Unlike fiat currencies, such as the Euro or the US Dollar, the value of Bitcoin (BTC) is not defined by a single entity like a central bank. Instead, the price is influenced by supply and demand.
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Do I have to pay taxes when I buy or sell Bitcoin?
The short answer is - yes. In almost all countries, you have to pay taxes on the trade of most commodities. However, the regulatory framework for the taxation of cryptocurrencies differs from country to country.
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What is Bitcoin mining and how does mining work?
Mining is an essential activity in the Bitcoin network and the process by which new Bitcoins are brought into circulation. It is critical for validating transactions, creating new blocks without the need for a central authority, and keeping the entire Bitcoin network safe.
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What is a Bitcoin node?
In the Bitcoin network, nodes fulfil a very important role in constantly monitoring the Bitcoin blockchain to distinguish legitimate Bitcoin transactions from non-legitimate ones. Their basic job is to prevent attempts to double-spend bitcoins that have already been spent elsewhere.
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What’s the difference between a cryptocurrency like Bitcoin and fiat money?
Cryptocurrencies share many similarities with conventional fiat money but also offer some interesting advantages such as the fact they can be spent and received by anyone, anywhere, and at any time without the need for a bank or a government.
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