Countdown Begins: 100 Days Until Bitcoin’s Next Halving

The impending approval of a spot Bitcoin ETF has dominated the crypto news cycle for the best part of three months. As the drawn out process is finally reaching its zenith, many have forgotten about the other major Bitcoin event slated for 2024 – the next halving. Today marks 100 sleeps until Bitcoin’s block reward reaches its next significant milestone. But what exactly is a Bitcoin halving, and how will it impact the industry?

What is the Bitcoin halving?

When Bitcoin was founded in 2009, developer Satoshi Nakamoto embedded a set of rules designed to prevent the currency from becoming inflationary. Unlike AUD, USD and other fiat currencies – which can be printed infinitely – only 21 million BTC can ever be released into circulation. To prevent a huge number of Bitcoin hitting the market at once, exhausting the supply and causing the price to plummet, Satoshi implemented a unique feature called Bitcoin halving.

Bitcoins are created by a sea of miners (high-powered computers) competing to solve a complex algorithmic equation (a hash function). Each time they successfully solve the problem, a batch of Bitcoin transactions (block) are processed and added to the chain. As a reward for their contributions to the blockchain, miners are rewarded with a preset amount of Bitcoin.

Simply put, a halving event… halves the amount of BTC a miner earns for successfully solving the hash function. This occurs every 210,000 blocks, or approximately every four years. The last halving event occurred in 2020, with the block reward dropping from 12.5 BTC to just 6.25 BTC.

Why is the upcoming Bitcoin halving important?

Bitcoin halving events have a significant impact on the coin’s supply. It steadily increases the rarity and difficulty of acquiring BTC. All things being equal, this can create upwards pressure on Bitcoin’s price due to supply diminishing while demand remains the same (or even increases). 

Historically, BTC halving events have had a major effect on the overall crypto market. Bitcoin tends to have a four year cycle, with each halving corresponding with a new all-time high in the following 12-24 months. We saw this in 2021, when the price of Bitcoin broke USD $66,000 (AUD $88,611) about 20 months after the most recent halving. Due to this, investors are speculating that the upcoming halving will kickstart the next crypto bull market following the lengthy crypto winter of the past two years.

Of course, history is exactly that – history. It is not necessarily a reliable indicator of what’s to come. However, the fundamental influence on supply and demand that a Bitcoin halving has can’t just be ignored, and the cryptosphere is starting to get excited about the potential of a 2024-25 bull run.