Bitcoin Halving : Is it signaling the end of bitcoin creation ?

What is a Bitcoin Halving ?

The Bitcoin Halving is a periodic event that occurs approximately every four years. Its purpose is to reduce the amount of newly created Bitcoin by halving the reward given to miners for each mined transaction block.

The Halving was designed to keep inflation under control and to limit the total amount of Bitcoin that will be in circulation to 21 million units.

What is the purpose of Halving ?

The Bitcoin Halving is also a means of regulating the quantity of Bitcoin in circulation.

The total amount of Bitcoin available is capped at 21 million, and nearly 19.27 million of them are already in circulation.

The Halving thus serves to slow down the creation of new Bitcoins and, therefore, control inflation.

During the first Halving in November 2012, the reward for each block was 50 Bitcoins; it dropped to 25 Bitcoins during the second Halving in July 2016, to 12.5 Bitcoins during the third Halving in May 2020, and will be 6.25 Bitcoins at the next Halving scheduled for April 2024.

When will the next Halving occur ?

Based on the current mining speed, the next Bitcoin Halving is expected to occur in April 2024.

This Halving will once again reduce the miners’ reward in Bitcoin, which will decrease from 6.25 to 3.125 Bitcoins per mined block.

Dates of all past Bitcoin Halvings

Here are all the halvings that have occurred since the creation of Bitcoin :

The Bitcoin Halving is also an opportunity for investors to closely monitor market developments in anticipation of this event.

Bitcoin Halving : Dates and Rewards until the last Satoshi

In total, about 32 halvings are scheduled in the Bitcoin protocol, before the reward for each mined block reaches zero. So far, we have experienced 3 Halvings, leaving 29 more Bitcoin Halvings until the issuance of the last Satoshi.

Once the mining reward reaches zero, miners will no longer derive their income from the creation of new bitcoins. Instead, transaction fees will become their main source of income, ensuring the viability and security of the Bitcoin network.

The last Bitcoin Halving is expected to occur approximately in 2136.

What are the consequences of a Halving on Bitcoin ?

Historically, previous halvings have had a significant impact on the price of Bitcoin. By artificially reducing the supply of Bitcoins in the market, Bitcoin becomes scarcer, and its value theoretically increases.

This has been proven in past halvings, where each halving was followed by a bullish trend in Bitcoin’s price.

However, even though history has repeated itself, there is no guarantee that the price of Bitcoin will increase after a halving. Therefore, it’s important to remain cautious with investments and diversify one’s wallet.

The Halving and the security of the Bitcoin Network

The Halving also has an impact on the security of the Bitcoin network.

Mining Bitcoin requires immense computational power, which entails significant energy costs. If the price of Bitcoin does not follow the expected bullish trend after the Halving, some miners might be tempted to leave the network. This could lead to a decrease in the network’s computing power and thus a reduction in its security.

This is why the increase in Bitcoin’s price after a Halving is particularly important, from the perspective of miners’ profitability and thus the security of the network.

What will happen during the next Halving ?

During the next Halving scheduled for April 2024, the BTC reward for each mined block will be halved, dropping from 6.25 to 3.125 BTC.

This means that miners will receive fewer BTC as a reward for their work, potentially leading to a reduction in the supply of new Bitcoins on the market.

It’s difficult to predict with certainty the exact impact this will have on the price of Bitcoin. It can be influenced by many other factors, including economic and geopolitical ones.

However, if we refer to the history of previous halvings, an increase in the price of Bitcoin in the months following is expected.

What will happen when there are no more bitcoins to mine ?

As previously mentioned, the number of Bitcoins is finite, with a maximum of 21 million BTC to be in circulation.

Currently, there are approximately 19.27 million BTC in circulation, meaning there are about 1.73 million BTC left to mine.

When all the Bitcoins have been mined, miners will no longer receive Bitcoin rewards for their work in securing the blockchain.

This will not happen for several decades, probably around 2140. Indeed, the mining process slows down progressively as we approach this maximum number.

When there are no more new Bitcoins to mine, miners will no longer be rewarded with new Bitcoins. However, they will still be able to earn transaction fee rewards by validating transactions on the blockchain.

These transaction fees are the costs charged to users for conducting a transaction on the blockchain.

This means that miners will have to rely solely on transaction fees to sustain their activity. The amount of transaction fees will depend on the demand for conducting transactions on the Bitcoin blockchain.

If the demand for conducting transactions is low, miners will receive few transaction fees. Conversely, if the demand is high, transaction fees will increase, encouraging more miners to participate in transaction validation.

There could be an impact on miners’ profitability, who will likely have to transition to being validators, but this does not mean the end of Bitcoin.

The bitcoin halvings and the end of bitcoin creation

To summarize, the Bitcoin Halving is a major periodic event that significantly impacts the operation and price of Bitcoin.

Halving the reward for miners helps control inflation and limit the total amount of Bitcoins in circulation to 21 million units.

Halvings also affect the security of the Bitcoin network and could potentially lead to an increase in Bitcoin prices. However, the market often holds surprises, so past events should not be taken as guarantees of the future.

The next Halving is scheduled for April 2024, and the reward for each mined block will be halved, dropping from 6.25 to 3.125 BTC.

Although historically the price of Bitcoin has always increased in the months following a Halving, it’s difficult to predict the exact impact it will have on its value. It can also be influenced by numerous economic and geopolitical factors.

When there are no more new Bitcoins to mine, miners will have to rely solely on transaction fees to sustain their activity. This will undoubtedly impact the profitability of mining, but it does not signify the end of the Bitcoin blockchain.

Therefore, the Bitcoin Halving is a major event for investors and cryptocurrency enthusiasts to monitor.

It certainly raises questions about the future of the Bitcoin blockchain, network security, and mining profitability.

Despite these uncertainties, Bitcoin continues to attract numerous investors and is evolving as an innovative financial technology.