According to Bloomberg, the much-anticipated Bitcoin halving event took place recently, reducing the mining reward by half. This event, which occurs every four years, is designed to limit the number of Bitcoins in circulation to a maximum of 21 million, as per the original cryptocurrency's code. The halving mechanism was introduced by Bitcoin's anonymous creator, Satoshi Nakamoto, to prevent inflation.
The halving event, which was the fourth since 2012, reduced the daily reward for miners from 900 to 450 Bitcoins. Despite the reduction, Bitcoin advocates remain optimistic about the cryptocurrency's future. However, market watchers have noted that the halving was already factored into the price, resulting in limited price movement.
The impact of Bitcoin mining on the total number of tokens in circulation decreases with each halving. For instance, the number of tokens mined after the first halving represented 50% of the total Bitcoins at the time, while the new supply in the upcoming cycle will only account for 3.3%.
The halving event is expected to have a more significant impact on Bitcoin mining companies than on the cryptocurrency's price. Bitcoin mining, which is an energy-intensive process, involves using specialized computers to validate transactions on the blockchain. Large-scale miners are expected to consolidate, with publicly-traded firms gaining market share due to their greater access to funding and ability to invest in more efficient equipment.
The next Bitcoin halving is scheduled for 2028, reducing the reward for miners to 1.5625 from 3.125 for successfully processing a block of transaction data. Once the 21 million cap is reached, miners will have to rely on transaction fees, which currently constitute a small portion of their total revenue.