WHAT IS THE BITCOIN HALVING?

The Bitcoin halving refers to the process by which the reward for mining new blocks on the Bitcoin blockchain is reduced by half. This reduction occurs approximately every 210,000 blocks, or roughly every four years.

Not all bitcoin were released onto the market at the same time, but rather new coins are slowly mined by Bitcoin miners every day as a reward for mining new blocks in the blockchain. The halving is encoded into Bitcoin’s protocol to control its inflation rate and ensure that only 21 million bitcoins will ever be mined, making it a deflationary asset.

In the very beginning of Bitcoin’s history, the first block reward was 50 BTC. After the first halving in 2012, the block reward was cut in half to 25 BTC per block, and then cut in half again in 2016 to 12.5 BTC per block, and once more in 2020 to 6.25 BTC per block. Now, the block reward is getting cut in half to 3.125 BTC per block, with the next halving expected in 2028, cutting the reward down to 1.5625 BTC per block.

Bitcoin will continue to cut its new supply creation in half until there is no more bitcoin left to be mined, which is currently slated for the year of 2140 in May.

IMPORTANCE OF THE HALVING

The halving event is significant for several reasons. Firstly, it directly impacts the supply of new bitcoins entering circulation. With the block reward reduced, the rate of new bitcoin creat

ion slows down, leading to a gradual decrease in the available supply. This scarcity is a fundamental factor driving Bitcoin’s value proposition as a ਮੁੱਲ ਦਾ ਭੰਡਾਰ.

Secondly, the halving has historically been associated with bullish price movements. Previous halvings, such as those in 2012 and 2016, were followed by substantial increases in Bitcoin’s price. This pattern is partly attributed to the reduced supply coupled with sustained demand, leading to a potential imbalance that favors price appreciation.

Bitcoin has increased around 743% since the last halving in 2020, rising from ~$8,755 to an all time high of $73,790 on March 14, 2024. While past performance is no guarantee of future results, market participants are expecting to see another increase in the price of BTC, as strong institutional demand for the asset is coming in from recently approved spot ਬਿਟਕੋਿਨ ਐਕਸਚੇਂਜ traded products in the United States, Germany and Hong Kong, as well as the ਲੰਡਨ ਸਟਾਕ ਐਕਸਚੇਂਜ that is getting ready to offer physical Bitcoin exchange traded notes.