The Bitcoin halving just took place at block number 840,000. This event today reduced the mining reward for each block from 6.25 Bitcoins to 3.125 Bitcoins. New Bitcoins are put into circulation thanks to these mining rewards.
Another Bitcoin Halving
The halving is one of the most important events in the world of cryptocurrencies and occurs approximately every four years, more precisely every 210,000 blocks. This significantly reduces the supply of Bitcoin, helping to control inflation by maintaining scarcity.
Bitcoin was created on January 3, 2009. Initially, the reward for mining each block was 50 Bitcoins. The mining reward was halved for the first time on November 28, 2012 during the first halving event. The next halving event took place on July 9, 2016, reducing the mining reward to 12.5 Bitcoins per block, while the third halving, on May 11, 2020, reduced it further to 6.25 Bitcoins .
Now the reward for mining each Bitcoin block is 3,125 Bitcoins.
The ceiling of 21 million Bitcoins
Bitcoin operates on a proof-of-work consensus mechanism and, according to the algorithm, a halving must take place every 210,000 blocks until all 21 million Bitcoins are mined. The next Bitcoin halving is estimated to occur in 2028.
To change this predefined algorithm, a majority of Bitcoin miners, more than 50%, must agree, which is almost impossible given Bitcoin's decentralized and extensive network.
Currently, around 19 million Bitcoins have already been mined, with only 2 million left to mine.
Bitcoin's supply halving has a significant impact on the price of the cryptocurrency. Historically, it has been one of the biggest price drivers, with Bitcoin prices rising around the event. The event affects the operations of Bitcoin miners, as a reward halving without a corresponding significant price increase affects the cash flow of mining operations.
This article was written by Arnab Shome at www.financemagnates.com.
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