The next Bitcoin halving event is getting closer and is expected to take place between April 18 and April 22, 2024, at block 840,000. After this event, the block mining reward will be halved from 6.25 BTC to 3.125 BTC. Here's what you need to understand about the fourth Bitcoin halving.
Navigate through the upcoming Bitcoin reward halving
As of now, there are still nearly 2,900 blocks remaining until the upcoming halving event. To grasp the concept of halving, it is first necessary to understand how new Bitcoins come into existence, primarily through the mining process.
Specifically, miners validate blocks containing transactions awaiting confirmation. To obtain Bitcoin rewards, they participate in a computational competition, applying processing power in a method known as PoW.
After successfully exploring a block and validating the retained transfers, miners will be rewarded with 6.25 newly created BTC, in addition to collecting transaction fees from each transfer processed. Although block detection occurs on average every 10 minutes, this interval can vary.
Source: bitcoin.clarkmoody.com/dashboard/
Bitcoin halving is built into the network, to adjust the currency supply, occurring every 210,000 blocks or approximately every 4 years. Initially, when Satoshi Nakamoto introduced the Bitcoin protocol, miners were rewarded with 50 BTC for each block discovered until November 28, 2012.
Later, this reward was halved to 25 BTC per block. After another 210,000 blocks, with new blocks appearing approximately every 10 minutes, the reward was further reduced to 12.5 BTC on July 9, 2016. The most recent halving event, which took place on May 11, 2020, saw the block reward reduced to 6.25 BTC.
The countdown to the fourth event continues to tick, adding 210,000 blocks since block 630,000 marked the beginning of block 840,000. Based on the data and average block generation time, it is possible to calculate the expected halving date with considerable accuracy. Traditionally, each block is added every 10 minutes so the halving is expected to take place around April 20.
Source: Bitcoinsensus
However, since blocks are now mined at a slightly faster rate, this milestone could move to as early as April 17, possibly even earlier. As the halving approaches, the predictions become more and more accurate, right up until the last block. After the halving, miners will see their reward halved from 6.25 to 3,125 BTC, which is a sharp drop from the current daily coin total of around 900 BTC to 450 BTC.
With today's figures, that equates to a daily income drop from $62.72 million to $31.36 million. Essentially, the main function of halving is to halve mining rewards every four years, which should impact miners more than regular users or holders. This reduction could lead to changes in the network's hashrate as operators evaluate profitability.
The Bitcoin Whitepaper highlights:
“The steady addition of a constant stream of new coins is similar to gold miners using resources to put gold into circulation. In the case of BTC, CPU time and electricity will be used.”
For most people, the halving is a remotely observable event, watched through an online countdown, signaling an intentional slowdown in Bitcoin issuance. This creates a deflationary element to Bitcoin's economic structure. Since Bitcoin is a global and borderless phenomenon, the halving event was observed across many different time zones, celebrated globally.
Meanwhile, miners face the strategic challenge of modernizing their equipment and possibly expanding operations to mitigate the impact of a 50% revenue cut.
Bitcoin hashrate hits new high
As Bitcoin price struggles to hold above $70,000 – its previous multi-year high since November 2021, the cryptocurrency's hashrate continues to skyrocket.
Although the price is only slightly higher than the 2021 peak, the total hashrate is now 200% greater. Such an optimistic “imbalance” was pointed out by Ki Young Ju, CEO of leading cryptocurrency analysis platform CryptoQuant.
Therefore, the Bitcoin network can be compared to a money container. As miners are generating 200% more hashes per second, the bucket can now store 3 times more coins, the famous analyst said.
He also illustrated a chart with a huge 30-month increase in key Bitcoin network performance metrics. In 2021, these figures experienced their latest extended decline in nearly five years.
Source: Ki Young Ju
As mentioned before, in April 2024, the Bitcoin network will have its largest halving in terms of changing USD-denominated rewards for miners.
A total of 3-7% of Bitcoin miners may go offline after the halving as the reward is set to decrease from 6.25 to 3.125 Bitcoin per block.
According to CoinWarz data, in March 2024, Bitcoin hashrate increased by more than 700 Ehash per second at least four times.
Meanwhile, a year ago, it was still in the 300-350 EH/s range.
Bitcoin hashrate is the main measure of network activity. It shows the amount of net hash that miners are calculating every second to compete for the chance to add the next block.
The hashrate spike demonstrates miners' growing motivation to continue contributing to maintaining the safety and decentralization of the network. Therefore, the ongoing momentum is a clear signal of miner optimism about the medium-term BTC price performance.
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