Bitcoin block reward will decrease from 6.25 to 3.125 coins in approximately
Current Block at
Bitcoin Halving at Block #840,000
blocks to go...
Estimated date & time of reward drop:
What is Bitcoin Halving?
Bitcoin has a total supply of 21 million. The underlying code ensures that only 21 million bitcoins will ever exist. Bitcoin’s finite supply is a strong economic statement and supports its value system.
Bitcoin is distributed through mining. The 21 million bitcoins in existence are scheduled to be mined through the year 2140. That is, the last bitcoin is expected to be mined in the year 2140. At the current rate of emission, the unmined bitcoin will be exhausted before this speculated time. Almost 90% of bitcoin’s total supply has been mined. About 900 bitcoins are mined per day, currently.
To sustain the emission and increase scarcity, the number of bitcoin emitted per block is regularly reduced. This process of reducing the bitcoin emission per block is known as Bitcoin Halving.
After a predetermined block height (a number that is used to indicate a particular block), the amount of bitcoin emitted per block is reduced to half of the previous number. For bitcoin new halving occurs after an interval of 210,000 blocks or 4 years.
The most recent (2020) halving reduced bitcoin emission from 12.5 bitcoin per block to 6.25 bitcoin per block. This means that instead of 12.5 bitcoins, miners will now be rewarded with 6.25 bitcoins per block mined.
Why Is Bitcoin Halving Important?
Bitcoin halving serves both economic and sustenance purposes.
On the aspect of bitcoin’s economy, halving creates a scarcity pattern for bitcoin. Against a varying demand, bitcoin halving reduces the rate at which bitcoin is supplied. The demand for bitcoin has seen a consistent rise over the years, this has been met by a constant decrease in the supply rate.
To say the least, it solidifies bitcoin’s status as a store of value. A slower supply against a rising demand ensures that bitcoin is worth even more over time. Considering market sentiments and the craving for scarce commodities, the effect of Halving on bitcoin’s value exceeds the boundaries of demand and supply economics.
An estimated 3 million bitcoins are currently lost to forgotten wallet details, lost hard drives, and bitcoins owned by deceased investors. The majority of this figure is lost without chances of recovery. Considering the rate at which bitcoin is completely lost, bitcoin is a deflationary currency, and halving further complements this scarcity.
On the aspect of sustenance, bitcoin mining incentivizes miners to validate blocks and guard the bitcoin network. Miners ensure that the blockchain is protected from malicious attempts. As long as bitcoin’s emission continues, miners are drawn to the mining exercise and the bitcoin blockchain remains secured.
Halving sustains supply and hence mining. With halving creating scarcity, driving up value, and slowing down the emission rate of bitcoin, more miners are attracted to secure the blockchain for a longer period of time.