What is Bitcoin Halving?

The Bitcoin halving is slated to take place roughly on April 19-20, 2024. Understand it with the help of an example. Image a copper mine where the amount of copper extractable diminishes by 50% every four years. Consequently, with each passing four-year cycle, the quantity of copper available for mining steadily declines.

To understand it better, let’s delve into the process of Bitcoin mining. It begins with a cryptographic puzzle that needs to be solved, and this task is undertaken by a network of computers known as miners. The miner who successfully solves the puzzle first is rewarded with a Bitcoin. Therefore, the likelihood of success in mining ultimately depends on the collective computing power of the miner. The greater the computing power a miner possesses, the higher the probability that they will successfully solve the puzzle and earn a Bitcoin.

Hash Rate: It is the measure of computational power.

So, if there is a rise in hash rate that could mean more computing power is being allocated to mine Bitcoin. Also, it means that mining a Bitcoin has become more difficult now.

What is Bitcoin halving?

There is a cap of 21 million on Bitcoin supply. Miners mainly validate and record Bitcoin transactions on a global ledger. The transactions are recorded in a block. Once the transactions become part of the block, they are deemed valid.

As of now, we can earn 6.25 Bitcoins for every block. But, that changes with Bitcoin halving. After April 19-20, 2024 only 3.125 Bitcoins will be created with a new block. That means, Bitcoin miners reward is reduced to half.

Has it happened earlier?

Yes, it happened in November 2012, July 2016, and May 2020. Before Bitcoin halving happened, miners could get 50 Bitcoins as the reward for each block. That was reduced to 25, 12.5, and 6.25 later. And, with the latest halving event it will be reduced to 3.125 Bitcoins.