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The Bitcoin halving event set to occur in April is drawing attention as a significant development following the 2022 crypto winter and the economic downturn in 2023. This event is designed to gradually limit the supply of Bitcoin to support its value. The total supply of Bitcoin is capped at 21 million, with just over 19 million already mined, leaving less than 2 million Bitcoins to be mined. Here’s what to expect for the Bitcoin halving event in April 2024.
What to Expect for the Halving?
Bitcoin experienced a significant rally in 2023, delighting investors with an approximate 152% increase throughout the year. This surge came after a tumultuous period following Bitcoin’s record levels in 2021, which included the collapse of leading projects, liquidity issues, and the bankruptcy processes of many crypto companies in 2022.
The recent rally in cryptocurrency prices has spurred businesses out of stagnation, prompting mining companies to accelerate their profit-making efforts ahead of Bitcoin’s halving event. As the next halving approaches, Bitcoin block rewards will be cut in half, prompting miners to rush to make profits.
Bitcoin and the Mining Process
Bitcoin mining involves the rewarding process of using computational work to verify and add new transactions to blocks. Miners maintain the uniformity, timeliness, and immutability of the blockchain network, receiving newly created assets in return.
At Bitcoin’s inception in 2009, miners were rewarded with 50 Bitcoins per block. This reward was halved to 25 Bitcoins per block in November 2012, known as the second reward era. Bitcoin halvings occur every 210,000 blocks, reducing the reward offered to miners by half. These events are programmed to manage Bitcoin’s supply and demand dynamics and align with its pre-programmed features.
Diminishing rewards create financial challenges, especially for those heavily reliant on mining income. The fixed supply of Bitcoin exacerbates this difficulty, potentially leading to bankruptcy if rewards decrease without corresponding increases in transaction fees or Bitcoin value. Additionally, increasing competition for mining creates scarcity, driving up Bitcoin prices but making mining less profitable.
