The world’s biggest cryptocurrency’s “halving” occurs once every four years. The digital currency relies on what is known as a “miner”, who runs software that races to solve complex maths puzzles in return for Bitcoins.

Previous halvings have been followed by bull runs that saw a massive increase in bitcoin’s value and cryptocurrency investors are very much interested due to the effect halving has had previously on the cryptocurrency space.

Halving refers to the number of coins that miners receive for adding new transactions to the blockchain being cut in half until the last bitcoin is mined. Supply and demand is the theory around this-the fewer bitcoins that are being created, the more valuable those in existence are.

After every four years, the reward given to bitcoin miners for processing transaction is cut in half. Back in 2009, the reward for each block mined was 50 bitcoins. It reduced after the first halving to 25, then to 12.5, and now it’s 6.25 bitcoins per block after the halving that occurred in May 2020.

This system will continue until the year 2140 where miners will only be rewarded with fees for processing transactions that network users will pay, ensuring that miners still have the incentive to mine and keep the network going.

Bitcoin halving is very significant because it cuts in half the rate at which bitcoin is released in circulation, and it marks a drop in bitcoin’s finite supply. Bitcoin’s total supply is 21 million, we have about 18 million bitcoins already in circulation, there are about 3 million bitcoins left to be released through mining.

Why Does It Matter?
Bitcoin buyers should be aware of this systemic feature as well since a halving often comes with a large amount of turbulence for the cryptocurrency.

It’s easy to see why – as Bitcoin halving takes place, the supply of available Bitcoins becomes smaller, thus increasing the value of the Bitcoins yet to be mined. And with those fluctuations comes the chance to profit.

For some context, consider Bitcoin’s history. The first halving occurred on Nov. 28, 2012, when the price of a Bitcoin was a mere $12 – one year later, Bitcoin had skyrocketed to around $1,000. On July 9, 2016 the second halving took place – Bitcoin had fallen to $670 per coin by then, but it shot up to $2,550 by July 2017. In December of that year, Bitcoin peaked at a then all-time high of roughly $19,700.