#BTCPredictedNewATH Bitcoin Halving: What It Is and Why It Matters for Crypto Investors

What Is Bitcoin Halving? $BTC

The Bitcoin halving refers to an event that takes place about every four years and reduces the block reward by 50%. This lowers the supply of bitcoins entering the market, which increases scarcity and can act to raise its price if market conditions remain the same.

Block rewards are part of the blockchain’s automatic process of validating transactions and opening new blocks (called mining). Miners, participants who compete in a race to solve a cryptographic puzzle, are given new bitcoins if they are the first to solve it.

Their block is added to the blockchain, they receive a reward, and the network starts another race. All miners confirm the data in the newly added block while trying to solve the puzzle for their own new blocks, hoping for an ever-decreasing reward.

Key Takeaways

• A Bitcoin halving event occurs about every four years when the reward for mining is cut in half.

• Halvings reduce the rate at which new coins are created and thus lower the available amount of new supply.

Bitcoin last halved on April 19, 2024, resulting in a block reward of 3.125 BTC.

• The final halving is expected to occur in 2140, when the number of bitcoins circulating will reach its maximum supply of 21 million.

Is Bitcoin Halving a Good Thing?

There are several reasons why Bitcoin halvings are considered by many to be good for bitcoin’s ecosystem and market value. For others, it might not be such a good thing.

Inflation

One of the key concepts behind halving the reward is to address inflation concerns. Inflation is a decrease in the amount of goods that a certain amount of currency can buy at any given moment. In the United States, inflation is measured by how much it costs to buy a basket of goods. There is an acceptable inflation rate that is considered good for an economy—usually 2%—but this number is generally a target set by central banks as a goal rather than a reachable figure.