The bitcoin halving is an event that happens roughly every four years where rewards to miners are cut in halve, effectively limiting supply of the token.
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Bitcoin is nearly a year away from a key technical event — which might be the catalyst for a prolonged climb in the cryptocurrency’s value.
In April or May 2024, bitcoin is expected to undergo its next so-called “halving,” though the exact date is not yet known.
Bitcoin has been rising in the past few weeks in anticipation of the halving, as a potential U.S. Federal Reserve interest rate cut contends with the prospect of sluggish growth and tightening credit conditions resulting from woes in the banking sector.
One bitcoin was worth roughly $30,000 as of Wednesday morning, according to data from CoinGecko. The world’s largest cryptocurrency is up by more than 80% since the start of the year.
Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that the bitcoin jump above $30,000 at a time of bank failures and economic uncertainty suggests the cyclical “bottom” for bitcoin is forming.
“This tends to happen a year or so prior to the Bitcoin’s halving event, which is slated next for around April 2024,” Ayyar told CNBC via email.
What is the bitcoin halving?
Bitcoin halvings take place roughly every four years, or every time another 210,000 “blocks” are added to the blockchain. The event cuts the rewards to bitcoin miners — volunteers running specialized equipment to validate transactions on the network and mint new tokens — by 50%. The aim is to reduce the number of new bitcoin unit released into the market.
Currently, bitcoin miners receive 6.25 bitcoin for each block they successfully mine. This means their computer had the right amount of computing power needed to solve the cryptographic puzzles that secure the bitcoin network and prevent it from being compromised by malicious actors.
Once the next bitcoin halving occurs, this reward will be…
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