Halfway To The Halving: What This Means For Bitcoin

Bitcoin halvings are important events that have taken place since the digital asset was first launched in 2009. Since then, there have been a total of three halvings that have seen block reward cut down by half each time. The next bitcoin halving will happen in 2024 which means that the market is halfway there. As this fourth halving draws close, we take a look at how this affects the supply of BTC and in turn, the value of the cryptocurrency.

The bitcoin halving is scheduled to happen every 210,000 blocks and the estimate for the next halving is put at May 4th, 2024, going by the current rate at which BTC is being mined. Currently, there have been a little over 19 million BTC mined, which only leaves an additional 2 million BTC that is left to be mined. With the halving cutting block reward by half, presently sitting at 6.25 BTC per block, it helps to predict the supply mechanics of the digital asset.

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With each halving, the daily issuance and supply go down. It is expected to fall even lower with the next halving, where each block reward would only be 3.125 BTC, and with the average of 144 blocks that are mined per day, the daily BTC awarded to miners on a daily basis will fall from 900 to 450. This helps to ensure that the supply of bitcoin diminishes over time, making it one of the core features of the monetary policy of the network.

The bitcoin halving has various effects on the cryptocurrency. One of the ways where these effects are more prominent is mining difficulty. With less BTC being rewarded to miners for each block, it makes for stiffer competition, causing mining difficulty to skyrocket. This is evident in the trend that has followed the last bitcoin halving which took place in 2020. Likewise, bitcoin’s hashrate also increases as miners require more computing power to be able to mine blocks.

One notable thing about the current state of the network is the low fees. Even though bitcoin is halfway to another halving, transactions fees have remained near all-time lows. This is said to be the result of more efficient use of block space as there is no evidence that there is a decline in the economic usage of the network. 

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However, one thing has always remained consistent across all bitcoin halvings and that is the effect it has on the price. Now, halfway through to the next halvings have been when the digital asset has recorded some of its lowest prices. So there are expectations that the price will suffer at this point. Nevertheless, a halving that reduces the supply of BTC going into circulation has always been a trigger for the next bull rally and 2024 is expected to be no different.