In this brief article, we look at the upcoming fourth Bitcoin halving and why it is so significant. We look back at the three previous halving events, in 2012, 2016, and 2020, and how each halving cycle has been considerably different, as well as discuss the possible impact on Bitcoin and cryptocurrency more broadly of the upcoming halving in 2024.
The 4th Bitcoin Halving: What you need to know
The upcoming Bitcoin halving is on everyone’s lips, as we approach the 4th Bitcoin halving event scheduled to occur on April 19th 2024 at block number 840,000.
What is cryptocurrency?
You might be asking yourself, why is this even so significant?
The Bitcoin network is secured by a proof of work mining algorithm which serves two functions to secure the Bitcoin network from attack:
The function: To transfer and verify new Bitcoin transactions between bitcoin wallets every 10 minutes
The incentive: To solve complex mathematical proofs, with the first miner to solve the proof being rewarded with Bitcoin rewards in each 10 minute block.
The rewards for Bitcoin mining are significant, with the reward currently standing at 6.25 Bitcoin per block. To put this into perspective and assuming Bitcoin’s price is $50,000, this would equate to over $312,000 of revenue for a winning miner per block!
The effort to run a Bitcoin miner is also significant, with the cost of the machines to run the complex bitcoin protocol, power requirements and ongoing support and maintenance. This revenue from mining Bitcoin, otherwise known as the ‘mining reward’, is about to be slashed by 50% - ie: The Bitcoin Halving event. This event has only happened 4 times in Bitcoin’s history, programmed into Bitcoin’s source code from its genesis block in 2008.
The rewards for mining Bitcoin blocks has shrunk significantly since 2008, all by design by the anonymous creator Satoshi Nakamoto.
Each Bitcoin halving cycle is significantly different, as markets change, evolve and become more regulated, as well as the user base significantly increasing each cycle. Some believe that these events are a precursor to the next “crypto bull run” where markets rise significantly a few months after each halving.
While past performance doesn’t guarantee future returns, we need only look at the numbers and Bitcoin’s tokenomic design when it comes to how markets and price has reacted after each halving cycle:
- Total Bitcoin Cap: 21,000,000 (million) tokens
- Current BTC tokens in circulation (April 2024): 19,684,453 Bitcoin
- Remaining Supply: 1,315,457 Bitcoin
- Estimated date of last Bitcoin mined: 2140
Alongside the upcoming Bitcoin halving, it’s important to note where the current Bitcoin supply resides, and is this Bitcoin available to be traded?
Ranked from largest to smallest:
- Satoshi Nakamoto (Bitcoin Creator: 1,100,000 Bitcoin
- Winklevoss Twins (Founders of Gemini) 70,000 Bitcoin
- Major Exchanges - Binance, Bitfinex, OKX, Robinhood
- Governments - United States
- ETFs and Trusts - Grayscale, Microstrategy etc.
Many of the largest holders are actively supplying Bitcoin to the masses, there are many whales in the ecosystem holding their Bitcoin in cold storage for the long term, with unknown strategies and motives, often going years without moving or touching their Bitcoin holdings.
On this basis, some believe there could be a supply shock to the Bitcoin ecosystem where there simply isn’t enough to go around to cater to the increasing demand for Bitcoin investments and trading. A lack of available Bitcoin supply could create a number of scenarios:
- New or existing other cryptocurrencies or tokens becoming more popular
- Bitcoin’s popularity and interest decreases, stagnating the market
- Price rise in Bitcoin’s value
- Bitcoin becomes a collateral asset, stabilizing the market, giving other tokens greater market share.
Whatever the outcome may be, Bitcoin has grown from a small, niche cottage industry to a major asset class of its own, standing firm in the modern day global financial system. . We believe that Bitcoin investing should be available for everyone, to access the next step in financial evolution in Blockchain technology.
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