The Fourth Bitcoin Halving!

Here we go! A few hours ago, the Bitcoin network hosted the fourth Bitcoin Halving, which is considered one of the most popular and watched events in the world of cryptocurrencies. For cryptocurrency enthusiasts and investors, the halving is a long-awaited event, as it is one of the cornerstones of the Bitcoin network, making Bitcoin an increasingly scarce asset.

The fourth halving took place on the Bitcoin network on the night of April 19-20, after the block with number 840,000 was mined.

What Is Halving?

Halving is a process that takes place in the Bitcoin network roughly once every four years (every 210,000 mined blocks, to be precise). During this event, the reward to bitcoin miners for creating new blocks is cut exactly in half. That’s exactly what happened this past Saturday, when halving reduced the reward per newly mined block from the previous 6.25 BTC to 3.125 BTC.

The reduction in rewards for miners has several important implications. Firstly, it means that half as many new bitcoins are now entering circulation than have been in circulation over the past four years – as the amount of newly created bitcoins falls, with constant or rising demand, this can have a positive effect on the price change. It is the limited supply of Bitcoin and its falling inflation that most often drives rising demand.

The second and very important aspect is the increased competition between miners. As the reward for mining has been halved after halving, Bitcoin mining becomes less lucrative for those who do not mine completely efficiently or do not have cheap energy sources available. This may lead to less efficient miners having to reduce or cease operations, assuming that mining is no longer profitable for them. Halving also increases the average cost of mining one Bitcoin, which is always twice as high after halving as it was before.

Historically, halving has been shown to have a significant impact on the price of Bitcoin. In the past, it has always been the case that after halving, the price of Bitcoin rose up to tenfold over the course of 1.5 years, and even after the subsequent temporary decline, remained orders of magnitude higher than before halving. However, it should be remembered that the market’s reaction to halving is never certain, as historical events are no guarantee of future behaviour. The cryptocurrency market is influenced by a number of other factors, such as the geopolitical situation, the economic situation in the world, regulation or current market sentiment.

History of Halvings

First Halving (November 28, 2012)

The first Bitcoin halving took place on 28 November 2012. Prior to this date, the reward for creating a new block was 50 BTC. After the halving, this amount was reduced to 25 BTC. This event marked the first step in the real world to limit the supply of Bitcoin, making Bitcoin significantly more scarce.

Second Halving (July 9, 2016)

The second halving in the Bitcoin network took place on 9 July 2016. In this case, the reward for creating a block was reduced from 25 BTC to 12.5 BTC. The second halving was an important milestone in Bitcoin’s history, as it proved that the network could function despite a significant reduction in the reward for miners. After the second halving, the price of Bitcoin and public interest in the cryptocurrency rose significantly – in July 2016, Bitcoin was trading at around $700, and within 18 months of the halving, its price had risen to $19,000.

Third Halving (11 May 2020)

The third halving took place on 11 May 2020. This time, the reward for creating a block was again halved from 12.5 BTC to 6.25 BTC. The third halving has so far been a heavily covered event in the media, as companies such as Microstrategy and Tesla have invested in Bitcoin during this period. And even though the COVID-19 pandemic was raging during this period, which greatly affected global markets, Bitcoin rose from approximately $8,500 in the 18 months following the halving to $69 thousand in November 2021.

Final Thoughts

The history of halving has clearly shown us that this event is a very important milestone for Bitcoin on its way to becoming a globally respected and recognized asset. Each halving has brought with it changes in supply and demand dynamics that have affected the price of Bitcoin, the security of the network, and also the trust and growing interest of investors.

Although the short-term consequences of the past halving may be difficult to predict, Bitcoin’s long-term prospects remain positive. Bitcoin’s fixed supply, as well as the steadily growing interest in this digital currency, has led not only to a long-term rise in its price, but also to its global adoption and acceptance.

It should be remembered that investing in Bitcoin and cryptocurrencies still carries risks. Therefore, it is very important to stay informed and understand all the factors that affect the value of Bitcoin and alternative cryptocurrencies and make rational investment decisions based on this.

However, the fourth Bitcoin halving already shows us that Bitcoin is not going anywhere and still has great potential to change the world of finance and investment. With each halving, Bitcoin moves closer to its ultimate goal of becoming a decentralised and efficient alternative to traditional financial systems. The perception of bitcoin is thus gradually transforming in a fundamental way. Its acceptance among investors of all categories is growing.