A historical overview of the Bitcoin halving events.
The Bitcoin halving is upon us.
Without wasting too much time, let’s run through what that means and why this is a significant milestone for the overall Bitcoin narrative, and economic impact it could have on the Bitcoin price.
What is the Bitcoin Halving?
The Bitcoin halving refers to the reward that miners receive for successfully ‘solving a block.’ That is the reward for verifying the accuracy of the information that is published on the blockchain every 10 minutes is about to drop by half.
Given that new bitcoin are issued by the blockchain network every 10 minutes, this means that roughly 144 blocks are mined per day.
This event happens every four years and this is the third halving event.
For the first four years of Bitcoin’s existence, the number of new bitcoins issued every 10 minutes was 50. Every four years, this number is cut in half.
In 2012, the number of new bitcoins issued every 10 minutes dropped from 50 bitcoins to 25. In 2016, it dropped from 25 to 12.5.
Now, in the 2020 halving, it will drop from 12.5 to 6.25.
Why is this significant?
The halving decreases the number of new bitcoins generated per block. This means the supply of new bitcoins is lower.
Classical economic theory would suggest lower supply with steady demand leads to higher prices. Since the halving reduces the supply of new bitcoins, and demand usually remains steady, the halving has usually preceded some of Bitcoin’s biggest ramps.
In the image at the top of the document, note how the price has jumped significantly after each halving.
Bitcoin Halving Chart
In the image below, you can see Bitcoin’s inflation rate during each period.
Each halving lowers Bitcoin’s inflation rate. The orange line is Bitcoin’s inflation rate during a given period, while the blue line is the total number of bitcoins issued.
Bitcoin Halving Schedule
The Bitcoin halving is scheduled in block height, not date or time.
The halving happens every 210,000 blocks. The 2020 halving will happen at block 630,000. The 2024 halving will happen at block 840,000.
At the time of publishing this document, the halving event is expected to be Thursday, the 12th of May, however, the time is hard to predict due to the fact that blocks are not mined exactly 10 minutes apart.
What Happens to Miners During Halvings?
It is often speculated that halving events will lead to miners turning off their machines, and in some strange corners of the internet even suggestions of a BTC death spiral due to the reduction in mining reward.
However, Chris Bendiksen has recently written a report on why miners will continue and explains that
“Mining Death Spirals’ Exist Only in Theory, not in practice. They are highly theoretical edge cases without any historical real-world precedent.”
The crux of the argument is mining cost is largely a function of the difficulty, however, the difficulty of solving a block is a dynamic metric determined by the protocol itself and it can adjust both up and down to keep block times at 10 minutes on average
In a few decades when the reward gets too small, the transaction fee will become the main compensation for [mining] nodes. I’m sure that in 20 years there will either be very large transaction volume or no volume.
When is the 2024 Bitcoin Halving?
The 2024 halving will likely occur between March 2024 and June 2024.
Bitcoin Halving Dates History
This section will take a look at the previous two halvings.
The 2012 block halving was the first halving and happened on November 28th, 2012. The halving block was mined by SlushPool by someone using a Radeon HD 5800 miner.
- New BTC Per Block Before: 50 BTC per block
- New BTC Per Block After: 25 BTC per block
- Price on Halving Day: $12.35
- Price 150 Days Later: $127.00
The second halving occurred on July 9th, 2016.
- New BTC Per Block Before: 25 BTC per block
- New BTC Per Block After: 12.5 BTC per block
- Price on Halving Day: $650.63
- Price 150 Days Later: $758.81
Current Bitcoin Block Subsidy
The current Bitcoin block subsidy is 12.5 bitcoins per block. When block 630,000 is hit in 2020, the subsidy will drop to 6.25 bitcoins (BTC) per block.
When Will All 21 Million Bitcoins be Mined?
As it stands today, 85% of the total supply of Bitcoin has already been mined. Due to the emissions schedule the remaining bitcoin will take longer to mine than the preceding.
It is difficult to estimate exactly when all 21 million bitcoins (BTC) will be mined, but the estimates suggest that it will be around 2140.
However, more than 98% will be mined by 2030.
The BTC tipping point moment is almost upon us.