The halving event, which occurs at certain intervals in some cryptocurrency networks, especially #Bitcoin , is one of the most important events in the functioning of the Blockchain network. This event, which directly affects people and institutions carrying out IT activities, called cryptocurrency miners, is also closely followed by crypto investors.

Halving means the halving of the mining reward in Blockchain networks operating on the proof-of-work consensus mechanism. This event, which roughly reduces the supply of crypto money, increases the upward trend of the price due to the increase in demand.

Bitcoin is the first Blockchain network to implement halving as the first cryptocurrency. When Bitcoin was released in 2009 by its still-mysterious developer, Satoshi Nakamoto, the mining reward was 50 BTC. With the reward halving, which takes place every 4 years, the block reward was reduced to 25 BTC in 2012, 12.5 BTC in 2016, and 6.25 BTC in 2020. While miners currently earn 6.25 #btc for each block they mine, this amount will decrease to 3,125 BTC with the 4th reward halving that will take place on the Bitcoin network in 2024.

According to the software of the Bitcoin network, the reward halving will end with the 32nd halving in 2140. As a supply-limited asset, Bitcoin is set up as a blockchain network where the reward is halved every 210,000 blocks are produced. Since the Bitcoin supply is set to a maximum of 21 million BTC, when this amount is reached, Bitcoin production will end and miners will not receive block rewards. Instead, miners will only be able to earn transaction fees by verifying transactions taking place on existing blocks. Currently, 19.42 million BTC (approximately 92.5% of the total supply) has been mined.

Why is Bitcoin halving important? What is the impact on price?

Halving forms the basis of the token economy on the Bitcoin network. In this way, the Bitcoin supply is controlled and provides a significant advantage over the unlimited money supply of fiat currencies.

In addition, the fact that its supply is limited to 21 million is seen as an important factor in the scarcity of the asset. The halving mechanism, coded into the Bitcoin software, occurs automatically due to the decentralized nature of the Blockchain network. The 3 halving events that have occurred so far have had significant effects on the Bitcoin price. However, experts share the view that the positive effect of halving on the Bitcoin price may decrease over the years. So much so that, as the amount of reward miners will earn will decrease over the years, there are opinions that some miners having to withdraw from the market may have a negative impact on the cryptocurrency price.

However, others reject this view, relying on the long-term upward trend in the Bitcoin price and arguing that the BTCs that miners will obtain will be in satisfactory amounts in dollar terms. In addition, when mining activities decrease in the Bitcoin network, the view that a balance will automatically continue to be established in this area is gaining ground, as miners who continue to operate due to the decrease in difficulty can continue their transactions at a lower cost.

On the other hand, the positive effect of halving on the cryptocurrency price largely depends on speculative movements. Theoretically, when the demand for a good remains constant or increases, a decrease in supply pushes its price up. However, at this point, considering other factors affecting the demand for crypto assets, it would be wrong to say that the reward halving will definitely cause a price increase.

Historical data has so far shown that prices have increased after the halving event. However, the upward trend of the price occurred at different times during the relevant periods. Therefore, in volatile markets, it would not be right to expect the cryptocurrency price to move up quickly after the halving.

Historical moments of Bitcoin halving

The Bitcoin network has seen 3 halvings so far. The first halving event started in 2012 and the 4th halving event will occur in 2024.

Bitcoin's first halving took place in 2012

The first reward halving on the Bitcoin network was extremely important in testing the Bitcoin token economy. This event raised questions about how it would affect Bitcoin growth.

With the reward halving that took place on November 28, 2012, the block reward decreased from 50 BTC to 25 BTC. The Bitcoin price rose tremendously from $12 to $1,030, an increase of nearly 8,500% a year after the halving.

When the dates showed 2016, the second halving event was awaited with the same curiosity. After four years, Bitcoin adoption has increased even more. In this period when the popularity of crypto money began to increase, the second reward halving took place on July 9. This time, unlike the first event, there were short-term price increases before the halving.

After the mining reward dropped to 12.5 BTC,  BTC was trading at $650 and the decline continued for a few more weeks after the halving. Approximately 1.5 years after the second halving, Bitcoin set its all-time high at $20,000 at that time.

In 2020, when the 3rd halving took place, the Covid 19 crisis dealt a heavy blow to the entire global economy. Bitcoin was trading below $10,000 at that time. At the end of a 1.5-year period after the halving, Bitcoin set its historical peak at $69,000 in November 2021.

While the next halving is expected to occur in 2024, block rewards will drop to 3,125 BTC at block 840,000.

Which cryptocurrency networks other than Bitcoin have a halving mechanism?

While halving activity is observed among cryptocurrencies supplied by mining method using the proof-of-work consensus mechanism, some crypto currency developers can control the supply by different methods such as forking instead of halving by changing the code.

On the other hand, Litecoin is the most well-known among the altcoins that have a halving mechanism along with Bitcoin. After the Litecoin reward halving, which is planned to take place in August 2023, the reward amount, which is currently 12.5 LTC, will decrease to 6.25 LTC.

Among the other cryptocurrencies that will halve on its network, the reward halving will occur in 2024 along with Bitcoin, as well as the Bitcoin fork assets Bitcoin Cash and Bitcoin SV. Currently, the expected reward halving dates of these cryptocurrencies are as follows:

Other cryptocurrencies that have halved among cryptocurrencies with high market capitalization include assets such as Monero, Zcash, Dash and Raven.

As a result, halving is a key factor that causes investors to show interest in cryptocurrencies that use this mechanism, especially Bitcoin. The reason for this is that, unlike fiat currencies that have an unlimited supply mechanism and are under inflationary pressure, crypto currencies such as Bitcoin have a limited supply and have a disinflationary structure due to halving.

In addition, due to the limited supply of cryptocurrency, investors tend to hold Bitcoin assets long-term with a speculative approach, reducing the tendency to spend the asset as a currency. This weakens Bitcoin's feature as a currency and highlights its feature as an investment tool like a commodity.

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