Bitcoin is the first peer-to-peer network that allows the transfer of assets between users. Its operation is based on the mechanism of mining with rewards to the nodes supporting the system. The technology includes halving, which is a 2-fold decrease in the payment for the mined blocks. It is usually held approximately every 43-48 months. Bitcoin’s halving date in 2020 is May 11. This article will help you figure out when the next halving payout will occur.
What is Bitcoin halving
By this concept, experts mean a periodic reduction in the reward for mined blocks. To understand what bitcoin halving is, it is enough to translate the term from English. Halving – “to divide in half.” When halving, the reward to miners for finding blocks is reduced exactly 2 times. Initially, the reward was 50 BTC.
The mentioned term is used only for cryptocurrency networks with the Proof-of-Work consensus algorithm (bitcoin, lightcoin). The reduction of miners’ reward for each mined block in ecosystems with Proof-of-Stake is called reduction. The term reduction translates from English as “shrinkage.” However, miners’ reward per block is usually reduced not by 50%, but a little less (30-45%).
Why halving is needed in cryptocurrency
Halving is a tool to slow down the issuance of cryptocurrencies. Its main reason is to increase hash rate in networks of different coins. The computing power is constantly increasing with the arrival of new miners. Halving is a stabilizer for the issuance of new coins.
TheHalving cryptocurrencies is also needed because the value of digital coins is constantly increasing. An example is bitcoin. Previously, the reward for each mined block was 25 BTC. As of September 28, 2021, this amount equals about 76.6 million rubles. Such big money for simple computational work would attract many new miners. The hash rate of the network would grow rapidly, which is unacceptable for blockchain.
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Halving timeline and dates
The cryptocurrency community reliably knows when halving occurred and is planned by year. The information is summarized in the table below.
| Date | Fee |
|---|---|
| May 3, 2009 | 50 BTC |
| November 28, 2012 | 25 BTC |
| July 9, 2016 | 12.5 BTC |
| May 11, 2020 | 6.25 BTC |
| May 11, 2024 | 3.125 BTC |
| May 1, 2028 | 1.56 BTC. |
From the information in the table, it is clear that bitcoin will not have a halving in 2022-2023. This is due to the frequency of the event in question. Decrease in the size of the reward to miners per block occurs stably once every 43-48 months, depending on the growth rate of the hash rate of the Bitcoin network.
Halving 2012.
For the first time, the reward for a found block was automatically reduced by the system on November 28, 2012. Then miners began to receive 25 bitcoins for mined blocks instead of 50 bitcoins. Halving happened and caused a great resonance in the crypto community. In just a few months, the price of BTC increased and reached a maximum of $1163. In the next period (2 years after the halving), bitcoin’s value corrected and dropped to $152. This jump was the first whole market growth cycle in the history of the cryptocurrency. Subsequently, investors began to use the halving to make money. Now this event is taken into account in many cryptocurrency profit strategies.
Halving 2016
The second time this event occurred on July 9, 2016. While in 2016 the reward for mined bitcoin blocks decreased to 25 BTC, 4 years later it dropped to 12.5 BTC. There was also traced a characteristic halving jump of the cryptocurrency market. At first, the price failed to “break through” the former maximum and stopped at the mark of 670 dollars. However, later the chart underwent a strong growth, as after the first halving. In December 2017, the price almost reached 20,000 dollars. However, after a while, the “cryptozyme” began. This is the longest bearish trend in history – a long decline in the value of the entire digital asset market.
Halving 2020
Bitcoin’s third halving came on May 11, 2020. Now mining nodes started receiving only 6.25 bitcoin for unlocked blocks. There was also a price jump in the cryptocurrency market after the third halving. Bitcoin’s value reached the $8700 mark on the chart. However, in 2021, bitcoin showed even more potential at the time of the halving itself and in the months afterward. The value of the coin reached a new all-time high of $64,863.
Halving 2024
In 2024, the cryptocommunity predicts the biggest growth of Bitcoin in history. Experts expect a price of over $400,000 after Bitcoin’s next halving. However, ambitious predictions rarely come true. The third bitcoin halving was expected by analysts to take bitcoin to the $100,000 mark on the chart.
Impact on the BTC exchange rate
Each halving of the block reward stimulates the crypto market to a bullish trend – a prolonged rise in prices due to the scarcity of the coin. Bitcoin’s exchange rate starts to rise one way or another. The history of Bitcoin price changes demonstrates that usually strong growth happens within the next year after halving.
The value of some altcoins has a correlation to the bitcoin rate. If BTC falls, everyone expects the price of other coins to fall. Also, altcoins often show a bearish trend when Bitcoin grows. This is due to the flow of money into the main coin – BTC. However, altcoins tend to resume a bullish trend later on.
What will be the price of Bitcoin after halving?
Usually after a decrease in the reward to miners for finding blocks, coin rates grow and reach new extremes during the next month. According to forecasts analytical company Matrixport, by the next halving bitcoin (in 2024), its price will grow to $63 thousand.
Such conclusions experts made on the basis of historical data. Matrixport revealed the following pattern – the bitcoin rate reached the bottom exactly 15 months before the next halving, and then began to grow. This happened in 2016 and 2020.
Specialists also noted: in the month of bitcoin halving, the asset cost exactly 39% more expensive than in the same period two years ago. To calculate the estimated rate of bitcoin after halving in 2024, analysts took as an initial average price of the cryptocurrency in March 2022 – $45.53 thousand. These data allow you to use halving to earn money.
The impact on Bitcoin mining and blocks
After the halving of bitcoin, there are consequences for the mining of cryptocurrency. The main ones are an increase in the difficulty of mining and a decrease in issuance. Halving is associated by many people with an increase in the bitcoin exchange rate. For this reason, miners set up new mining nodes in order to make money. Each of them gets rewarded in proportion to the power spent. Therefore, the hash rate of the network increases after halving. The system responds by making it harder to mine new blocks.
After the halving on May 11, 2020, already in June, the amount of computation required adjusted from about 14,450 TH to 15,784 TH. This was a massive jump. Such a strong gap in Bitcoin’s difficulty after the halving indicates a large influx of new miners. As of September 28, 2021, the figure was 18,998 TH.
Bitcoin mining is also expected to become more complex in 2024 after another halving. According to part of the cryptocommunity, the jump will be approximately 10%. However, some analysts predict: in the next bitcoin halving we should expect a slightly higher increase in complexity. Such assumptions are reasonable due to the growing popularity of the cryptocurrency.
How to use Bitcoin halving to earn money
Statistics for 8 years show that after each halving of mining rewards, the price of Bitcoin goes up. However, Bitcoin halving by itself cannot serve as an unambiguous indicator of a bullish trend. It is necessary to assess the prospect of growth after halving comprehensively – taking into account fundamental factors and technical analysis.
In 2023, the cryptocurrency market is going through hard times. Since January, bitcoin has lost more than 70% of its value. Most analysts say: by November, the rate of the main cryptocurrency has actually reached the bottom or is very close to the minimum. For many investors, this serves as a signal to start buying before the next halving. To reduce risks, experts recommend using a pyramiding strategy – invest in bitcoin in small installments after confirming growth.
It is not worth waiting for the price to grow twice or more at the moment of the halving itself. The event sets the trend. The exchange rate can rise for a year after Bitcoin network rewards decline.
Halving of other cryptocurrencies
Not only bitcoin is characterized by the regular division of the reward for unraveling the links of the chain. Halving systematically occurs in other coins as well. For example, in 2020, in addition to bitcoin, division occurred in the following altcoins:
- Bitcoin Cash.
- Zcash.
- Bitcoin SV.
- Zcoin.
The split reward for these and other coins has few differences from bitcoin’s halving. The consequences of halving are almost identical – the difficulty of mining increases, the hash rate of the network increases, and emission decreases.
Litecoin
As of September 28, 2021, halving of litecoin has only occurred twice. The previous time, the reward for mined blocks on the Litecoin network decreased from 25 to 12.5 LTC.
The division of the reward of lytecoin occurs after mining 840 thousand blocks. The second decrease in the reward occurred on the 1,680,000 link of the LTC chain. At that point, 75% of all Litecoin – 56 million coins – had been mined.
The next halving is expected around August 5, 2023. On that day, 2,520,000 LTC chain links will be unraveled. Crypto experts predict a new cycle of Litecoin value growth even before the halving. This is exactly what happened in the past times.
Ethereum
Objectively, there is no concept of halving in the etherium network. However, the reward per block here also periodically decreases. This event is called a reduction. Unlike BTC halving, miners usually received 30-45% less for mined blocks through an undetermined number of unraveled chain links.
The Ethereum system first went live on July 30, 2015. At that time, the reward for mining was 5 ETH. However, already on October 16, 2017, as a result of the Byzantium hardfork (“hard chain unbundling” with the emergence of a new cryptocurrency), the reward size was reduced to 3 etherium. It occurred on 4,370,000 blocks on the Ethereum network.
Later, on February 28, 2019, the next hardfork was Constantinople. It occurred on 7,280,000 block. From the said moment until the next hardfork, the reward for mined blocks on the Ethereum network is 2 ETH.
Frequently Asked Questions
❓ Is bitcoin halving going to happen all the time?
Halving is done automatically by the system. This is conditioned by the coin issue limit of 21,000,000 units (to be mined in 2140).
📌 Halving always stimulates the growth of quotes?
Each coin has its own specificity and demand. So splitting the reward in half can lead to other outcomes, but more often than not, a bullish trend due to the scarcity created.
🔧 How fast is the complexity of bitcoin mining increasing?
There is no definite answer, as this figure is constantly jumping. In 2021, the maximum complexity was 25.05 TH and the minimum was 13.67 TH.
💰 How many Bitcoin coins have been mined so far?
As of January 2021, more than 18.6 million Bitcoins have been produced. Issuance amounted to 88.57% of the total number of coins.
📝 When is the next bitcoin halving?
The next halving will happen in 2024.
📘 What is the systematic reduction period in PoS?
Usually the period is 2-3 years. Depending on the specific network, the period can be longer or shorter.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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