The Halving of Bitcoin: How This Crucial Mechanism Works

The halving is one of the most anticipated events in the world of cryptocurrencies. Essentially, it is an automatic decrease in the rewards that miners receive for processing and validating transactions on the Bitcoin blockchain. This mechanism has been integrated into the Bitcoin code since its creation and is executed every 210,000 blocks, approximately every four years.

Why Did Bitcoin Implement Halving?

Behind the halving lies a clear economic strategy: to control the supply of bitcoins to keep it scarce and, theoretically, valuable. The maximum supply of Bitcoin is set at 21 million BTC, an amount that will never be exceeded. The halving ensures that this limit is reached progressively and predictably, creating a truly limited digital asset in supply.

Without the halving, miners would continue to receive new bitcoins indefinitely, resulting in constant inflation. The mechanism ensures that the issuance decreases steadily until it is completely exhausted around the year 2140.

The Bitcoin Way: A Story of Halvings

The first halving occurred in November 2012, reducing the block reward from 50 BTC to 25 BTC. Four years later, in July 2016, the second reduction brought the reward down to 12.5 BTC. The third event, which took place in May 2020, again decreased the compensation to 6.25 BTC.

Each halving has marked significant moments in the history of Bitcoin, with direct implications on the price and the dynamics of the cryptocurrency market. Traders and investors closely follow these events for their possible effects on volatility and investment opportunities.

The Next Halving: April 2024

The fourth Bitcoin halving is expected to occur in April 2024, when the block height reaches 840,000. On this occasion, the reward will be reduced again, from 6.25 BTC to 3.125 BTC per validated block.

After this halving, there will be 32 more scheduled events until the issuance of Bitcoin is completely exhausted. Once these 32 subsequent halvings are completed, no more new bitcoins will be generated, and the maximum supply of 21 million BTC will have been definitively reached.

What Happens to Your Bitcoins After the Halving?

A common question among holders is whether the halving directly affects their positions. The answer is simple: your existing bitcoins remain intact. The halving does not change the amount of BTC you own.

However, the indirect impact is what really matters. This event can influence the price of Bitcoin and generate significant movements in the cryptocurrency market. For this reason, traders and investors constantly monitor the approach of each halving as a key factor in their market analysis.

Currently, more than 90% of all bitcoins have already been mined, indicating that we are in an advanced phase of the total issuance of Bitcoin.