Crypto Glossary

Halving

In Bitcoin, a halving is an event where the rewards paid to miners is cut in half. This is programmed right into the code of Bitcoin, so it is a very predictable event designed to make Bitcoin a deflationary asset.

Miner awards are how Bitcoin is created. New Bitcoin is created every block and awarded to miners in exchange for their work in powering the network. That Bitcoin then enters circulation. Thing is, unlike the US dollar or other fiat currencies where they can “print” more money anytime they want, the inflation schedule of Bitcoin is pre-determined by the code and cannot be changed.

Every 4 years (roughly), we have a halving event where the miner rewards are cut in half.

The most recent halving took place on May 11, 2020. Before that, 12.5 BTC were created for every block. After the halving, the reward reduced to 6.25. Some time in 2024, the next halving will take place and reduce the award by half yet again, or 3.125 BTC.

Each halving reduces the amount of new Bitcoin entering the supply. When coupled with increased demand, simple economics of supply/demand mean that price goes up.

In the history of Bitcoin, the market tends to go in cycles that revolve around the halving. Each halving results in a supply shortage which, in turn, results in a massive bull run and a massive increase in the price of Bitcoin. This inevitably results in a massive correction (or bear market). Then, Bitcoin will run flat for a little while. Then, the next halving sparks the next bull run.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
>