In 1924, an ounce of gold was worth $20. Fast forward to 2024, and an ounce of gold is worth $2,380. Yet, did you know that during this time, the total supply of gold has more than tripled? Every year, gold miners extract an additional 1% to 3% of gold from the Earth's crust. And, given technological developments, gold mining is only going to accelerate:
Now, imagine that instead of an ever-increasing supply of gold, it was capped because there was simply no more gold to mine. So, how much is an ounce of gold worth right now? It's probably worth hundreds of millions of dollars. That's the same way I look at Bitcoin.
Bitcoin Mining Supply Cuts in Half Again When people talk about the "Bitcoin halving," they're referring to the halving of the rewards miners receive.
Bitcoin miners get their income from two sources:
Block Reward: 6.25 BTC (before the April 2024 halving) or 3.125 BTC (after the halving). Miners receive this reward for keeping the network secure.
Transaction Fees: Miners receive any transaction fees paid by users who process transactions in that block.
An example is a block I picked at random. Miners receive 0.725 BTC from transaction fees plus a 6.25 BTC block reward:
This reward, the generation of new BTC, is cut in half every four years, or more precisely every 210,000 blocks, which takes about 10 minutes each. This is done programmatically and cannot be changed because it is part of the immutable Bitcoin code.
Here's what the supply of Bitcoin will look like in the next few years:
2020-2024: 6.25 new Bitcoins per block, or 900 Bitcoins per day
2024-2028: 3.125 new BTC per block, or 450 BTC per day
2028-2032: 1.5625 new BTC per block, or 225 BTC per day
2032-2036: 0.78125 new BTC per block, or 112.5 BTC per day.
Bitcoin halvings -- when new supply is cut in half -- will continue until 2140, when there will be no more Bitcoins to mine and miners will make money solely from transaction fees paid by users. So how do Bitcoin miners make money? Transaction fees are expected to soon exceed block rewards, so don't worry, Bitcoin miners won't go bankrupt.The main conclusion is that unlike gold, which has a supply that increases by 1% to 3% per year, Bitcoin is becoming increasingly scarce!
Let’s look at Bitcoin’s inflation rate over the years: 2020-2024: BTC inflation rate 1.8%; 2024-2028: BTC inflation rate 0.83%; 2028-2032: BTC inflation rate 0.4%; 2032-2036: BTC inflation rate 0.2%.
So, as you can see, Bitcoin’s inflation rate will be much lower than that of gold. Unlike any other asset in the world, Bitcoin’s supply is finite and cannot be changed. It cannot be printed, forged, copied, or increased. This is why people are so excited about the upcoming Bitcoin halving in April 2024.
Bitcoin Halving April 2024 – How High Will BTC Go?
The halving will occur on April 20th, which is almost like a religious holiday for Bitcoin enthusiasts. The date marks another four-year period of low inflation.
If you understand economics, when an asset becomes more scarce, the price goes up.
In addition, since many people believe that the Bitcoin halving is good for the value of Bitcoin, they often buy Bitcoin around the halving date, which has historically triggered Bitcoin bull runs with a significant price increase before and after the halving.
Let's take a look at the price trends after the previous halvings:
1. The first halving (November 28, 2012): Halving price: about $11 Peak price after halving: about $1,150 (November 2013) Increase: more than 10,000%
2. The second halving (July 9, 2016): Halving price: about $650 Peak price after halving: about $19,800 (December 2017) Increase: more than 3,000%
3. The third halving (May 11, 2020): Halving price: about $8,700 Peak price after halving: about $68,700 (November 2021) Increase: more than 600%
4. The fourth halving (April 20, 2024): Halving price: about $65,000 Peak price after halving:? Increase percentage:?
Now, fill in the blanks! How far do you think Bitcoin can go? Institutional adoption of Bitcoin and the launch of Bitcoin ETFs are driving demand up, while BTC inflation is even lower. If the predictions come true, we may have another Bitcoin bull run!
How high can it go in this 4-year cycle? Who knows?! $100,000? $150,000? Or will it drop to $20,000?
Please don’t treat investing in Bitcoin like playing Russian roulette! Before concluding this article, here are 5 cool Bitcoin halving facts 1. Maximum total supply You may have heard that the maximum total supply of Bitcoin is 21 million BTC. However, this is not entirely accurate. Due to the way the protocol handles decimals, the total number of Bitcoins that will be mined is 20,999,999.9769 BTC.
2. Last Bitcoin Mined Did you know that the last Bitcoin is expected to be mined around 2140, after 33 halvings?
3. Halving Total A total of 33 halvings will take place before the last Bitcoin is mined.
4. % Mined As of now, 94% of Bitcoin has been mined. In 12 years, 99% of BTC will be mined. 5. After 40 years, only 1.75 BTC will be mined every day (currently 450), with an annual inflation rate of 0.003%.
