Bitcoin halving is a built-in feature of Bitcoin that cuts the rewards for mining by 50%. This occurs after 210,000 blocks of mining — or approximately every four years.
In 2024, Bitcoin halving day is expected to occur around April 16 (4/16/2024). After that point, successfully mining a bitcoin will result in half of the rewards; mining operations may become drastically less profitable overnight.
So, why is Bitcoin halving an important part of the protocol? How will it affect global cryptocurrency markets, and how will it affect miners? We’ll answer these questions in a moment.
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How will Bitcoin halving day affect global cryptocurrency markets?
You might assume that halving the value of Bitcoin mining might have a dramatic effect on the crypto’s value — but that’s probably not the case.
Bitcoin halving day doesn’t come as a surprise. The ledger history is public, and the markets have already priced in the changes in mining rewards.
Halving the rewards increases scarcity, which typically results in a moderate increase in value. It may also draw more attention to cryptocurrency in general, which could have a “rising tide” effect for other products (such as Ether).
Notably, the 2024 halving will push Bitcoin’s inflation rate below the inflation rate for gold. That could mean a more dramatic effect on the cryptocurrency’s value than we saw in previous halvings (but market dynamics are extremely complex, so that’s not guaranteed).
Why is halving day important for the future of Bitcoin?
Halving the rewards for mining Bitcoin encourages miners to find more innovative (and, hopefully, energy-efficient) ways to mine. That’s a fundamental part of the Proof-of-Work (PoW) crypto model.
It’s also worth noting that the Bitcoin protocol does not allow for infinite growth: Only 21 million Bitcoins are mineable, and all of those coins will eventually be mined (approximately 31 years after Bitcoin’s inception).
From that point, Bitcoin’s success will rely completely on transaction fees. That’s a different strategy than cryptocurrencies like Ethereum that rely on a Proof-of-Stake (PoS) model.
Many experts in the crypto space believe that PoS is more sustainable than PoW. It’s undeniably more efficient from an energy conservation standpoint — by one estimate, Bitcoin mining consumed from 0.2% to 0.9% of the global demand for electricity in 2023.
After the 2024 halving, will Bitcoin mining still be profitable?
Bitcoin mining is profitable, but requires an enormous investment in specialized hardware. The profitability is directly related to the cost of electricity for the miner, and China has the market fairly locked up: As of 2021, there were about 109,000 active miners in the Chinese provinces of Guangdong, Zhejiang, Shandong, and Jiangsu.
Halving day will certainly impact miners more than investors, but again, halving day isn’t a surprise — professional miners have been preparing for this eventuality for quite a while.
Related: Can Someone Steal My Crypto with Just a Seed Phrase?
What determines when Bitcoin halving day occurs?
Halving day occurs after 210,000 blocks have been successfully mined. Since the difficulty of mining increases with every successful attempt, the rate of mining has remained somewhat consistent since the inception of Bitcoin.
The Bitcoin mining algorithm is intended to allow new blocks to be found every 10 minutes. That’s not precise; some blocks take longer to find, and some take less. Halving occurs about once every four years, but the exact date isn’t an absolute.
Preparing for Bitcoin Halving Day
If you’re a regular investor, Bitcoin halving day will probably provide a moderate boost to your portfolio. However, nothing is guaranteed — markets are complex, so make sure you understand the risks before putting funds into Bitcoin (or any other cryptocurrency).
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