The bitcoin halving, which occurs once every four years and is expected to take place this week, will reduce rewards for miners and some investors think it will push prices higher
By Matthew Sparkes
20 February 2024
The price of bitcoin appears to be getting less volatile
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What is the bitcoin halving?
Bitcoin is a digital currency that operates free from central control: rather than an authority like a bank or a government keeping track of who owns what, bitcoin relies on cryptography.
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So-called miners collect information about transactions and log them in a ledger called a blockchain. These miners use computers to perform vast numbers of calculations with the aim of completing a cryptographic problem, consuming about 0.7 per cent of electricity globally in the process. The first miner to solve this problem adds their collection of transaction data – a block – to the blockchain.
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They are also rewarded with a set amount of newly created bitcoin, a figure that is enshrined in the source code that describes and runs the network. After every 210,000 blocks, there is an event called the halving where the size of the reward shrinks by 50 per cent. This is intended to avoid inflation due to too many coins being created.
The first blocks ever mined saw rewards of 50 coins, but this has now dropped following three halvings to 6.25 coins. The last halving was in May 2020.
When is the next bitcoin halving?
The next bitcoin halving is expected some time around 19 April and will reduce miner rewards to 3.125 coins. The rewards will continue to diminish before disappearing entirely after 21 million coins have been created, somewhere around the year 2140. At that point, no new coins will ever exist.