Bitcoin Halving: What Is It? Its benefits to Investors

Bitcoin halving is an event that occurs every four years or after 210,000 blocks have been mined, whichever is earlier. In this blog post, I’ll show you what Bitcoin halving is, its significance, and why it presents a compelling opportunity for investors to consider.

What Is Bitcoin Halving

Bitcoin halving is the process of cutting by half, the bitcoin reward to miners. This event has been programmed into the system from the beginning. It’s aim is to crontroll the supply of bitcoin, make it scarce and valuable.

Since its launch, Bitcoin halving has occured 3 times, in 2012, 2016 and 2020. The next halving will occur in April of this year, 2024. And is usual there’s excitement amongst crypto traders, investors and enthusiasts.

Why? it has profound implications. It signals high volatitilty but usually ends bullish in the period following the halvening.

Initially set at 50 bitcoins, the reward was halved to 25 in 2012, then to 12.5 in 2016, and so on. The most recent bitcoin halving occurred in May 2020, reducing the reward to 6.25 bitcoins. The next halving will be sometime in April this year, 2024 when miners’ reward is expected to reduce to 3.125.

Thus, from April 2024, miners will receive 3.125 bitcoins for every block successfully mined. So far about 19,601,487.5 in circulation and about 1,398,512.5 left to be mined. At the current rate of 6.25 bitcoin reward, about 900 coins are added per day by 826,238 miners. This will drop with the next halvening.

The final halving will be in 2140 by which time there’ll be 21 million BTC. And At that point, there will be 21 million BTC mined and in circulation. No more coins will be created thereafter.

Benefits of Bitcoin Halving for Investors

As I’ve idenfitified earlier, bitcoin halving has profound implications for investors and here’re how:

1. Scarcity and Increased Value
As the supply of new bitcoins diminishes over time due to halving events, the digital currency becomes increasingly scarce. Economic principles dictate that scarcity often leads to increased value, making Bitcoin an attractive proposition for investors seeking assets with potential for long-term growth.

The role halving plays in controlling the supply of bitcoin makes it a store value, more like gold than fiat currencies. The supply of fiat currency is usually manipulated by the relevant’s country’s central bank, hency its value fluctuates.
But the supply of bitcoin is fixed and immutable, hence is considered as a global store of value.

2. Historical Price Performance
Halving reduces the rate by which new coins are created. It ensures the bitcoin supply remains finite, thus, maintains its value over time. Again the inflation rate of bitcoin usually decreases after halving. This means supply of new coins is reduced.

Reduced inflation rate often lead to higher demand and a jump in price. Thus, as historical data has shown, each event has been followed by a significant increase in the cryptocurrency’s price.

While past performance doesn’t guarantee future results, the correlation between halving events and price surges has caught the attention of many investors looking for patterns in the volatile cryptocurrency market.

3. Mining Dynamics
Bitcoin halving directly impacts the economics of mining. As rewards decrease, miners must become more efficient and resourceful to maintain profitability. This, in turn, could lead to increased demand for Bitcoin, as miners and investors alike recognize its intrinsic value.

4. Market Attention and FOMO
The anticipation leading up to a Bitcoin halving event often generates increased media coverage and investor attention. This heightened awareness can create a sense of Fear of Missing Out (FOMO) among investors, driving up demand and, consequently, the price of Bitcoin.

5. Long-Term Investment Thesis
Bitcoin halving is aligned with the cryptocurrency’s underlying principles of decentralization, scarcity, and resistance to inflation. Investors with a long-term perspective may view these fundamentals as reasons to include Bitcoin in their investment portfolios.

Final words

In the dynamic world of cryptocurrency, Bitcoin halving stands out as a unique and influential event. Investors keen on exploring the potential benefits of this phenomenon should conduct thorough research, considering their risk tolerance and investment goals.

While Bitcoin remains a speculative asset, the combination of scarcity, historical price trends, and the fundamental principles of the cryptocurrency make the period surrounding a halving an intriguing time for those looking to capitalize on potential opportunities in the digital assets space.

So if you have ever considered investing in bitcoin, do so now; so as to derive the maximum benefits that 2024 halving event gives.