That special day that comes only
every four years
Bitcoin halvings are like leap years: they occur roughly every four years with the benefit of reducing inflation and adding new value. The upcoming halving event is expected for mid-May 2020.
Miner’s reward is halved
Bitcoin miners, who are verifying transactions and grouping them into blocks, receive 50% fewer bitcoins.
After the upcoming halving, the reward will be 6.25.
No fixed date
Until the maximum amount of XBT (21 Mio. coins) is reached around the year 2140, there will be a halving for every 210’000 blocks produced, which corresponds to about 4 years.
Key event to prevent inflation
Bitcoin halvings have a direct impact on the offer of new Bitcoins:
the constraint supply often leads to an increased Bitcoin price.
What is a Bitcoin halving?
Bitcoin halvings are pre-scheduled events that divide the miner’s reward for verifying transactions by two. The so called “miners” maintain and protect the Bitcoin network and group transactions into blocks by adding them to the blockchain. As this action requires computing power and cost, miners are usually rewarded with a certain amount of Bitcoins for each block added. The supply limit of 21 Mio. Bitcoins is adjusted regularly by reducing the rewards by 50%.
When will it happen?
After 210’000 mined blocks, a halving event takes place. The time frame corresponds to approximately four years. As no accurate date is determined, the estimated date is around May 11th, 2020. Since the launch of Bitcoins in 2009, two halvings have already occurred. After this upcoming third halving, miners will be rewarded with 6.25 XBT.
|Launch of Bitcoin||3 Jan. 2009||0||50 new XBT|
|1st halving||28 Nov. 2012||210’000||25 new XBT|
|2nd halving||9 Jul. 2016||420’000||12.5 new XBT|
|3rd halving||11 May 2020||630’000||6.25 new XBT|
|4th halving||Expected 2024||740’000||3.125 new XBT|
|5th halving||Expected 2028||850’000||1.5625 new XBT|
|Maximum supply reached||Expected 2140||6’930’000||0 new XBT|
Halvings and Bitcoin price evolution
Historically, bitcoin prices surge a month before halving and during the period after. As the table shows, Bitcoin prices have never dropped below their value prior to the latest halving. This can be explained by the increased attention around Bitcoin and the decreased supply of new Bitcoins. However, halving is often described as a key event to prevent XBT from inflation. If demands remain strong, the constrained supply should lead to bullish bitcoin market.
Bitcoin halving and Covid-19
Traders should keep in mind that no halving is like the other and that the circumstances can vary every four years, considering that cryptocurrencies are volatile assets. To spice things up, the Coronavirus crisis is currently shaking the world economy to the core and might have an impact.
As most of the Bitcoin mining is done in China, the Coronavirus impact on mining remains a concern. To monitor the situation, we can look at the Bitcoin hash rate (computing power needed to confirm transactions on the blockchain), which is an indicator of health of the network. At this time, the hash rate of Bitcoin is stable to slightly rising, which will probably enable miners to continue making healthy profits even after the halving.
How to seize the opportunity with Swissquote
Follow the four easy steps below and trade this year’s Bitcoin halving:
Unimpressed with Bitcoin?
Swing into action and trade another 11 cryptocurrencies with Swissquote including the classics Ethereum, Litecoin, Ripple and Bitcoin Cash or the newcomers Chainlink, Ethereum Classic, EOS, Stellar, Tezos, Augur and 0x.