This log-scale chart show the impact of previous halvenings.
What will happen to the bitcoin price after the next "Halvening" on April 15th 2024?
What is the bitcoin halvening?
The halvening is an event which happens approximately every four years. It effectively halves the number of bitcoins which can be mined going forwards. It's a bit like closing down half of a gold mine. Future production halves.
The date when this occurs is colloquially is known as the "halving" or the "halvening". I prefer the latter spelling which entered usage in about 2012 after a mis-spelling by a bitcoiner. (Just like "hodl").
The period of 4 years is approximate, because the bitcoin coding specifies that the halvening actually occurs every 210'000 blocks. Since it takes an average of ten minutes between each block, around 144 blocks are mined daily. That's just over 210'000 blocks in 4 years.
Currently 6.25 bitcoins are produced per block. That's equivalent to about 900 bitcoin per day.
After the next halvening, which is expected in just 18 days time. the reward per block will reduce to 3.125 bitcoins per block, or 450 bitcoin per day.
Of the millions of mining rigs only one of them will earn the reward.
Think of it like a game where many computers compete to solve a puzzle. The one that solves it first wins a prize in the form of new bitcoins. Then the game starts again.
As mining rigs become faster and more efficient the length of time it takes to solve the problem can shorten.
The difficulty is adjusted every 2016 blocks based on the time it took to find the previous 2016 blocks. At the desired rate of one block each 10 minutes, 2016 blocks would take exactly two weeks to find. If the previous 2016 blocks took more less two weeks to find, the difficulty is increased to restore the required time frame.
Nov. 28, 2012, to 25 bitcoin
July 9, 2016, to 12.5 bitcoins
May 11, 2020, to 6.25 bitcoins
Upcoming: April 15, 2024, to 3.125 bitcoins
We are 18 days away from the next bitcoin halvening.
As the number of people want to own bitcoin has grown, the price has increased. The more people willing to accept an asset, the more it's worth. That's the network effect. It's exponential. A 10% increase in bitcoin holders produces a greater than 10% increase in the price.
So for bitcoin we have rising demand. In two weeks time we'll see falling supply.
On the chart below you can see what happened to the bitcoin price after the previous halvenings. Make your own judgement as to where this is going.
Yesterday, (Wednesday), the new bitcoin ETFs bought approximately 3477 bitcoins. This compares with the 900 bitcoins which are mined daily. The ETFs absorbed all of the newly mined bitcoin, and some on top.
Since inception on 11th January 2024 the new bitcoin ETFs have purchased about 496'588 bitcoins, as compared to just 69'300 bitcoins which have been mined in the same period. The new demand from the ETFs has been an important factor in the reewcent rise in bitcoin prices.
What will happen to the bitcoin price after the supply falls? It'll become even harder to become a "whole-coiner".
What is the bitcoin halvening?
The halvening is an event which happens approximately every four years. It effectively halves the number of bitcoins which can be mined going forwards. It's a bit like closing down half of a gold mine. Future production halves.
The date when this occurs is colloquially is known as the "halving" or the "halvening". I prefer the latter spelling which entered usage in about 2012 after a mis-spelling by a bitcoiner. (Just like "hodl").
The period of 4 years is approximate, because the bitcoin coding specifies that the halvening actually occurs every 210'000 blocks. Since it takes an average of ten minutes between each block, around 144 blocks are mined daily. That's just over 210'000 blocks in 4 years.
Currently 6.25 bitcoins are produced per block. That's equivalent to about 900 bitcoin per day.
After the next halvening, which is expected in just 18 days time. the reward per block will reduce to 3.125 bitcoins per block, or 450 bitcoin per day.
Of the millions of mining rigs only one of them will earn the reward.
Think of it like a game where many computers compete to solve a puzzle. The one that solves it first wins a prize in the form of new bitcoins. Then the game starts again.
As mining rigs become faster and more efficient the length of time it takes to solve the problem can shorten.
The difficulty is adjusted every 2016 blocks based on the time it took to find the previous 2016 blocks. At the desired rate of one block each 10 minutes, 2016 blocks would take exactly two weeks to find. If the previous 2016 blocks took more less two weeks to find, the difficulty is increased to restore the required time frame.
Nov. 28, 2012, to 25 bitcoin
July 9, 2016, to 12.5 bitcoins
May 11, 2020, to 6.25 bitcoins
Upcoming: April 15, 2024, to 3.125 bitcoins
We are 18 days away from the next bitcoin halvening.
As the number of people want to own bitcoin has grown, the price has increased. The more people willing to accept an asset, the more it's worth. That's the network effect. It's exponential. A 10% increase in bitcoin holders produces a greater than 10% increase in the price.
So for bitcoin we have rising demand. In two weeks time we'll see falling supply.
On the chart below you can see what happened to the bitcoin price after the previous halvenings. Make your own judgement as to where this is going.
Yesterday, (Wednesday), the new bitcoin ETFs bought approximately 3477 bitcoins. This compares with the 900 bitcoins which are mined daily. The ETFs absorbed all of the newly mined bitcoin, and some on top.
Since inception on 11th January 2024 the new bitcoin ETFs have purchased about 496'588 bitcoins, as compared to just 69'300 bitcoins which have been mined in the same period. The new demand from the ETFs has been an important factor in the reewcent rise in bitcoin prices.
What will happen to the bitcoin price after the supply falls? It'll become even harder to become a "whole-coiner".
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