What Is The Bitcoin Halving?
The bitcoin halving is an event that happens every 210,000 blocks (approximately 4 years) where the issuance of new bitcoin (the block subsidy) is cut in half. This effectively reduces the rate at which new bitcoin enter circulation, and has a direct impact on the bitcoin inflation.
The bitcoin halving also has an indirect impact on circulating supply, as it reduces the rate at which new bitcoin are brought into the global market.
This in turn, increases the stock-to-flow ratio, which is a measure of how scarce bitcoin is. The higher the stock-to-flow ratio, the greater the ability for something to be a store of value long into the future.
Historically, the reduction in bitcoin’s inflation rate encourages a savings mentality instead of a spending one, as holders believe that bitcoins will be worth more in the future due to a reduction in the circulating supply relative to the demand.
The halving also has a direct impact on bitcoin miners, as it affects their profitability. After the halving, bitcoin miners receive 50% less bitcoin than before so it becomes less profitable for miners to continue operating. As a result, miners may need to sell some of their bitcoin to cover their expenses or capitulate entirely and move to a part of the world with cheaper and more abundant electricity.
The bitcoin halving event is important because it helps to keep inflation in check, ensures that bitcoin gets scarcer over time, and is one of the key drivers of long-term price appreciation.
The next Halvening is scheduled to take place in May 2024 when the block rewardWhat Is The Block Reward? The block reward is how Bitcoin miners are compensated for mining and adding blocks of transactions to the blockchain. The block reward is made up... will be cut from 6.25 to 3.125 BTC.