The Bitcoin halving just took place at block number 840,000. This event today reduced the mining reward for each block to 3.125 Bitcoins from 6.25 Bitcoins. New Bitcoins are introduced into circulation through these mining rewards.
Another Bitcoin Halving
Halving is one of the most significant events in the cryptocurrency world and occurs approximately every four years, specifically after every 210,000 blocks. It greatly reduces the supply of Bitcoin, thus helping to control inflation by maintaining scarcity.
Bitcoin was created on 3 January 2009. Initially, the reward for mining each block was 50 Bitcoins. The mining reward was first halved on 28 November 2012 in the first halving event. The next halving event took place on 9 July 2016, reducing the mining reward to 12.5 Bitcoins per block, while the third halving on 11 May 2020 reduced it further to 6.25 Bitcoins.
Now, the reward for mining each Bitcoin block is 3.125 Bitcoins.
The Cap of 21 Million Bitcoins
Bitcoin operates on a proof-of-work consensus mechanism, and according to the algorithm, a halving must occur every 210,000 blocks until all 21 million Bitcoins are mined. It is estimated that the last Bitcoin halving will happen around 2140.
To alter this pre-set algorithm, a majority of Bitcoin miners, more than 50 percent, must agree, which is nearly impossible given Bitcoin’s decentralized and extensive network.
Currently, around 19 million Bitcoins have already been mined, leaving only 2 million more to be mined.
The halving of Bitcoin supply has a significant impact on the cryptocurrency’s price. Historically, it has been one of the major price drivers, with Bitcoin prices surging around the event. The event affects Bitcoin miners’ operations, as a reduction in the reward by half without a corresponding significant price increase, affects the cash flow of the mining operations.
This article was written by Arnab Shome at www.financemagnates.com.
