Halving refers to a process that reduces the issuance rate of new coins. In other words, halving in cryptocurrencies is the periodic reduction of the block subsidy provided to miners. This process allows a crypto-asset to follow a fixed issuance rate until its maximum supply is reached.
What is halving?
Block halving is the process of reducing the rate at which new cryptocurrencies are created. Specifically, it refers to periodic halving events where the block rewards available to miners are reduced.
Halvings are a key element of the cryptocurrency economic model as they ensure that coins will be released at a steady rate and show a predictable rate of decline. This controlled rate of material inflation is the main difference between cryptocurrencies and traditional fiat currencies, which basically have an infinite supply.
What Does Halving Mean?
Halving literally means “halving”. In mining cryptocurrencies, it means that the reward per block in mining production is halved at certain intervals.
Mining activities are necessary for the production of cryptocurrencies as well as for the confirmation of transfers in the blockchain system. End of mining or slowdown of transactions will affect the usability of the system. The number of units to be produced in all cryptocurrencies produced by mining has been determined and it cannot be produced above the specified amount. In this way, the supply-demand balance, which is the main factor in pricing the cryptocurrency, was preserved and inflation was prevented.
What is Cryptocurrency Halving?
Halving in cryptocurrencies is the formation of two separate blockchain networks as a result of changes made to the code of a blockchain network. These changes may not be accepted by some of the miners or users of the network, and therefore two different versions of the network’s code are formed. A bifurcation occurs between these two versions, and two different currencies are formed between these new networks. For example, Bitcoin Cash was created as a result of a halving of the Bitcoin blockchain network.
What Happens When a Halving Happens?
Since halving is a reward reduction method used for mining cryptocurrencies, it means that the reward amount of miners is halved. This makes it harder for miners to earn rewards and makes the network’s mining more energy efficient. Therefore, when halving occurs, miners earn less rewards, which can lead to reduced mining operations.
When halving happens, the following are likely to happen:
- The reward amount of miners is halved.
- Mining activities are reduced as it becomes harder to earn rewards.
- In the halving cryptocurrency, the supply decreases.
- The price of the cryptocurrency in question may increase after the decreasing supply.
- Mining may become less profitable.
- Miners may quit their business after the profits decrease.
Halving Cryptocurrencies
Many cryptocurrencies such as Bitcoin, Litecoin, Bitcoin Cash, Bitcoin SV use the halving method. The block reward of these cryptocurrencies is halved at certain intervals. For example, in Bitcoin, halving occurs every 210,000 blocks, and the block reward is halved after each halving.
The first Bitcoin halving took place in 2012 and the block reward was reduced from 50 BTC to 25 BTC. The second halving took place in 2016 and the block reward was reduced from 25 BTC to 12.5 BTC. The third halving took place in 2020 and the block reward was reduced from 12.5 BTC to 6.25 BTC.
Litecoin follows a similar path for halving, for example the first halving took place in 2012 and the block reward was reduced from 50 LTC to 25 LTC. The second halving took place in 2019 and the block reward was reduced from 25 LTC to 12.5 LTC.
halving cycle The upcoming cryptocurrencies are as follows:
- Flux – February 4, 2023 at 12:07
- Handshake (HNS) – 24 Nisan 2023 saat 23:02
- Litecoin (LTC) – July 30, 2023 at 07:00
- Bitcoin (BTC) – March 18, 2024 at 04:41
- Bitcoin Cash (BCH) 14 Nisan 2024 saat 12:40
- BitcoinSV (BSV) – April 29, 2024 at 06:16
Not: The dates published by Nice Hash are estimates and may change as the date approaches, taking into account market data.
Bitcoin’s Halving
Bitcoin halving is the halving of the reward per blocks created every 10 minutes on the Bitcoin blockchain. This event is completed every 210 thousand blocks as required by the BTC system. Thus, BTC halving takes place on average every 3 years, every 10 months.
Bitcoin halving is a reward reduction method used for mining. This method aims to make the Bitcoin network energy efficient and mining less profitable. Block reward halving occurs every 210,000 blocks, and the block reward is halved after each halving.
The first Bitcoin halving took place in 2012 and the block reward was reduced from 50 BTC to 25 BTC. The second halving took place in 2016 and the block reward was reduced from 25 BTC to 12.5 BTC. The third halving took place in 2020 and the block reward was reduced from 12.5 BTC to 6.25 BTC.
The block reward halving process reduces the supply of Bitcoin, which has the potential to push the price up. However, the impact of the block reward halving event on price is often uncertain and multiple factors need to be considered in order to predict future price movements. Also, as mentioned above, halving the rewards for miners can make mining less profitable and therefore cause miners to quit mining.
Bitcoin Halving Formula
Binance Academy publishes a countdown timer for Bitcoin halving on its official website. The difference of this counter from the others is that it uses blockchain statistics instead of the generally accepted block time (10 minutes). Thus, the timer counter obtains an estimate of the current average block time and performs the calculation accordingly. Although the meter is fluctuating, it is said to give the most accurate data.
The Bitcoin halving counter on Binance Academy is calculated according to the following formula:
(Halving block – Next block height) * Average time between blocks – estimated time to next block.
Bitcoin Halving Cycle
The Bitcoin halving cycle occurs every 4 years. In other words, every 4 years, the reward per block in Bitcoin is halved. Block reward halving occurs every 210,000 blocks. Bitcoin completed the first 105,000 blocks as of 2020. According to some Bitcoin supporters like Samson Mow, the halving serves as a reminder to accumulate more Bitcoin.
The halving cycle is a unique tool that reduces Bitcoin’s inflation rate over time. Thanks to halving, the current supply of Bitcoin decreases and increases the value of Bitcoins that have not yet been mined.
While the number of Bitcoins mined exceeded 19 million in the past days, 6.25 new BTC are currently being circulated every 10 minutes. In other words, 250 thousand dollars worth of BTC is mined with each block.
