Bitcoin halving recently occurred at block number 840,000. This event reduced the mining reward for each block from 6.25 bitcoins to 3.125 bitcoins today. New bitcoins are put into circulation through these mining rewards.
Another bitcoin halving
Halving is one of the most significant events in the cryptocurrency world and usually happens every four years, typically after every 210,000 blocks. This greatly reduces the supply of Bitcoin, thus helping to control inflation by maintaining scarcity.
Bitcoin was created on January 3, 2009. Initially, each block was 50 Bitcoins to mine. On November 28, 2012, the mining reward was first halved. The next halving event took place on July 9, 2016, which reduced the mining reward to 12.5 bitcoins per block, while the third halving on May 11, 2020 further reduced it to 6.25 bitcoins.
Now, the reward for mining each bitcoin block is 3.125 bitcoins.
A cap of 21 million bitcoins
Bitcoin works on a proof-of-work consensus system, and according to the algorithm, a halving must occur every 210,000 blocks until all 21 million bitcoins have been mined. The next bitcoin halving is predicted to happen in 2028.
To change this pre-set algorithm, a majority of Bitcoin miners, more than 50 percent, must agree, which is nearly impossible due to Bitcoin’s decentralized and extensive network.
Currently, about 19 million bitcoins have already been mined, with only 2 million more to be mined.
A halving of Bitcoin’s supply has a significant impact on the cryptocurrency’s price. Historically, this has been one of the major price drivers, with bitcoin prices rising around this event. This phenomenon affects the operations of Bitcoin miners, as halving the reward without the associated significant price, affects the cash flow of mining operations.
This article is written by Arnab Shome at www.financemagnates.com.